Birmingham's hotel sector has seen revenue per available room (revPAR) fall by 12.3 per cent to just £41, the second lowest of the UK cities surveyed, according to the latest research by business advisory firm Deloitte.

The city's occupancy levels are the third worst in the UK at 64.3 per cent, narrowly ahead of Leeds, which has an occupancy rate of 63.1 per cent and Reading, which is at the bottom of the table with 53.8 per cent.

Despite having such low occupancy levels, Birmingham is set for a significant rise in the number of rooms available in the city as plans get underway for several new hotels, including the five star Weston at One Snowhill and the four star Hotel La Tour at City Park Gate.

Major cities like Bristol, Liverpool, Manchester and Newcastle all boast higher occupancy levels, with 66.5 per cent, 69.1 per cent, 69.4 per cent and 72 per cent respectively, despite having average room rates of £67, £69, £72 and £69 respectively, compared to just £63 in Birmingham.

But Manchester and Liverpool in particular have had substantial falls in revPar of 15.3 per cent and 19.9 per cent for the year-to-June, demonstrating that Birmingham is not the only city finding it tough.

Alistair Pritchard, associate partner and leader of Deloitte's tourism, hospitality and leisure sector across the Midlands, said: "Birmingham's figures tend to be influenced by conferences with big international conferences really bolstering the numbers. Despite the International Rotary Convention attracting more than 20,000 delegates to the city in June, occupancy levels remained low.

"Regional UK hotel performance has a strong correlation to UK gross domestic product performance and should start improving as the recession subsides.

"But the jury is still out on when the UK economy will recover but currently most are anticipating a sluggish recovery in 2010.

"We are seeing strong domestic demand for tourism this summer as more Britons holiday in the UK, with occupancy levels for cottage rentals, caravan and holiday parks holding up well, and in many cases ahead of last year. Birmingham is unlikely to significantly benefit from this although the strength of the Euro may lead to more UK city breaks as opposed to continental ones.

"Overall, hotels in the UK have held up exceptionally well in the global economic downturn with the average revPAR down by only 11.1 per cent, especially when compared to other countries in Europe, some of which are seeing revPAR drop by up to 40 per cent."