The strong pound and economic crisis in the Far East took their toll on the hotel business forcing UKoccupancy rates down from 74.3 % in 1997 to 72.9 % in 1998.
The figures reflect the fall in tourism experienced in 1998, a result of the football World Cup and the poor weather.
However, this was balanced by increasing rates from £63.41 in 1997 to £65.22 in 1998 and a rise in profits from 40.8 % to 41.2 %, according to the report published by BDO Hospitality Consulting, which was based on a sample of 369 hotels.
Average room rates are expected to increase 6% resulting in a room rate of £69 for 1999.
Jonathan Langston, joint managing director of BDO Hospitality Consulting said: “We forecast a stable UK occupancy of 73 % in 1999 with a two percentage point increase in 2000, primarily as a result of millennium celebrations.”