Heathrow's chain hotels are enjoying buoyant demand following the opening of Terminal 5.

During the first three months after the opening of the new terminal, average occupancy at the airport's full-service hotels increased by 2.8 percentage points to 84.9 per cent compared to the same period a year earlier.

Income before fixed charges (IBFC) – also known as gross operating profit – rose by 2.5 per cent to a daily figure of £45.89 per available room.  Profit growth was driven by the higher demand plus a 4.9 per cent increase in achieved average room rate to £84.32. The combination resulted in robust 8.4 per cent growth in rooms revenue.

"Given its status as the gateway to London, Heathrow has always been an important hotel market. Since T5 opened Heathrow's hoteliers have generated 2.5 per cent more profit per available room. Robust revenue growth has overcome a dip in profit conversion caused by rising costs, a problem affecting the whole UK hotel industry," said David Bailey, deputy managing director, TRI Hospitality Consulting.

With more than 90 airlines serving approximately 67 million passengers annually, Heathrow is the world's busiest international airport in terms of passenger numbers.  T5, which opened on 27 March, is expected to accommodate a further 30 million passengers each year.

There are currently 8,800 hotel bedrooms in the Heathrow area, 88 per cent of which are full-service operations.  The airport itself, which directly and indirectly supports some 100,000 jobs, generates strong corporate demand with hotels regularly full to capacity, particularly on Tuesdays and Wednesdays.

In addition, demand comes from a large number of domestic and international companies based nearby.

T5 has stimulated new hotel developments in and around the airport.  The most prominent new arrival will be Arora International's 605-bedroom Sofitel, which is directly linked to the new terminal and due to open this week (31 July). 

In addition, the new-build 200-bedroom Ramada Heathrow is currently being built on the site of the former Ramada hotel on Bath Road, and is scheduled to open in September.  A 207-bedroom Travelodge is currently under construction in proximity to the Central Terminal Area and expected to open later this year. 

Looking further ahead, Hilton has an agreement with Shiva Hotels who will operate a 350-bedroom hotel under franchise near T5 at Poyle Manor. The hotel is earmarked to open in 2010.

"The Heathrow hotel market has a strong track record in absorbing additional supply while maintaining or increasing occupancy levels. Despite some teething problems, T5 looks destined to enhance both Heathrow's economy and reputation," said Bailey.