Confidence amongst hotel general managers suffered a slight setback in Q1 2010 as the new year produced a mixed outlook across the UK.

Our Q1 2010 Confidence Monitor results revealed a small increase in the proportion of negative respondents at the expense of positive respondents compared with Q4 2009, with a 3.5% increase in the number of general managers surveyed who were not certain about what the next three months would bring.

However, UK hoteliers have a much brighter outlook in Q1 2010 compared to Q1 2009, with more than 55% of respondents either optimistic or very optimistic about their hotel's trading performance over the next three months. Looking back, just 29% of respondents were optimistic or very optimistic about future trading performance in Q1 2009.

Occupancy expectations for Q1 2010 remained mixed, with 50% of respondents to the survey expecting a growth in the first three months of 2010. Despite this, more than a quarter of respondents are not anticipating a change in their room occupancy levels for the first three months of the year; with the remaining 24% forecasting a decline.

Due in part to the soft comparables of Q1 2009, 65% of respondents to our survey anticipate average room rate in Q1 2010 to either remain the same or increase. As a result, rooms revenues in Q1 2010 are anticipated by hoteliers to increase by 55%, compared to 70% of respondents anticipating a decline in rooms revenue in Q4 2009.

Year-end growth in rooms revenue during 2010 is anticipated by 69% of the 115 general managers who completed the Hotel Confidence Monitor survey, with less than 20% of respondents expecting a year of negative revenue performance.

"The feel-good factor of the fourth quarter in 2009 has been tempered by the realism that the UK is making a very laboured exit from the recession and we can expect the road ahead to be bumpy. 

The positive story for the quarter is the number of respondents who are projecting an increase in performance levels in 2010, particularly in profitability," said David Bailey, deputy managing director, TRI Hospitality Consulting.

The Hotel Confidence Monitor results show a significant improvement in the outlook for income before fixed costs (IBFC), with 77% of respondents either expecting to maintain or increase their profitably during Q1 2010, rising to 85% for 2010.