There's no good way to say this – almost every indicator, every expert and every anecdote says that it's going to be even tougher next year. The main trends for both London and the provinces are that occupancy, average room rate, the revenue available per room, the income available before fixed charges per room, profitability and staff levels are all down.

There is no point in spreading false optimism, because burying heads in the sand is the worst way to go about things in the current climate. But if there is pragmatism in the trade, then it's only because we've seen it all before. RevPAR (revenue per available room) since 1981has ranged by nearly 50%, from the lows of the 1981 recession through the 'things can only get better' highs of the ‘90s, up and down via two Gulf Wars, the SARS epidemic and the London bombings. For the hotel trade and its funders, instability is part of the deal, if not part of the fun. But there are many managers out there who know what it takes.

The June ‘UK Chain Hotels Market Review’ shows occupancy levels in the UK are down 3.4 percentage points for the first six months of this year. RevPAR was down 10.1% in June alone, and an average 11.5% for the first half of the year. Profit – measured as income before fixed charges – was down 16.7% in the year to June, with daylight appearing as June's profits fell by a slightly rosier 11.6%. Despite the general malaise, London hotels maintained an encouraging 84.1% occupancy in June, as discounts pushed the average room rate in the capital down by 8.8% to an average of £115.69. Yet, London hotels are performing better than their provincial counterparts, with occupancy rates in for the first half of 2009 for London at 77.3% versus 65.8% in the rest of the country.

In general, it is the high-end hotel market that is suffering most, as companies reduce employee travel to cut costs, affecting many of these hotels who rely on executive business. Yet leisure spending is set to fall less sharply, with Savills research showing that overall leisure spending by individuals is forecast to dip by less than 1% this year, which could explain why the budget hotels are not feeling the pinch as acutely as the luxury chains.

In fact, the expansion of the budget hotel sector can be traced to the 1990-1993 recession, when the demand for ‘value for money’ rooms increased. Over recent months, we have seen a similar trend – as customers who previously might have sought out well-known hotels and restaurants trade down.

Nevertheless, the insolvency statistics show there is a general rising trend of hotel failures. In Q3 2007, no hotels went into administration, yet by Q1 this year, that had risen rapidly to 31 from just two in Q3 2008. While the Q2 2009 figures show the number of administrations fell back to 12, this is to be expected due to the industry’s seasonal nature. However, all eyes will be on Q4 and Q1 2010 figures after a poor summer and as traditional holiday income tails off.

While the sector ’s health score remains consistently modest compared to other industries, interestingly we have seen a steady fall of only four points from the high times of 2007 - see PDF chart - Hotel industry performance (274kb).

There have been some notable hotel failures in the past six months, including Folio Hotels, Real Hotel Group, Four Pillars, The Ellington in Leeds and The Forbury in Reading (see ‘Hotels in highlight’). It is predicted by four in ten European hotel executives that more than five hotel chains will go into insolvency in the coming year.

With the number of visitors to the UK falling from around 33 million to 31 million during the 12 months ending in April 2009, according to the Office of National Statistics, it is easy to see why hotels are struggling.