British hotels feel pinch and there's worse to come

British hotels are grappling with the worst trading conditions for 30 years as room rates plummet and operators slash prices to attract customers, the latest research by accountants PricewaterhouseCoopers shows.

Whitbread, the leisure company, is due to update investors this week amid fears that its budget chain Premier Inn is being hit hard by the slump.

PwC warns that weaker hotel groups could fail as British firms continue to cut corporate hospitality budgets. Robert Milburn, a partner at PwC, says: "The climate is worse than in the period after 9/11 and we are now roughly where we were in the early 1990s recession. But our forecast is that there is worse to come."

PwC expects average room rates to fall 10 per cent to just £78 ($200) a night in 2009, but that figure disguises the fact that some sectors are facing far worse conditions.

At airport hotels, the figure is closer to 20 per cent, and worse in cities such as Manchester and Liverpool, where joblessness is soaring.

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