End Of Summer Coincides With Profit Hit At UK Hotels

BristolHotelProfit per room at hotels in the UK fell by 4 percent in September, as a summer marked by GOPPAR growth came to a halt and demand levels shifted toward a more business-led mix, according to the latest data tracking full-service hotels from HotStats.

The drop in profit was primarily due to a 1.3-percent decline in rooms revenue, which fell to £105.77. This was in contrast to an increase in non-rooms revenue, which included an uplift in food & beverage (up 0.8 percent) and conference & banqueting (up 1.7 percent) revenue, on a per-available-room basis.

As a result of the movement across all revenue centres, TRevPAR at hotels in the UK fell by 0.9 percent in the month to £159.66. This represents the first decline in this measure since before the strong period of summer trading began back in May 2018.

The fall in revenue was further exacerbated by rising costs, which included a 1.0-percentage-point increase in payroll to 25.7 percent of total revenue, as well as a 0.6-percentage-point increase in overheads, which grew to 19.9 percent of total revenue.

On a departmental basis, rising costs contributed to falling profit levels in both the Rooms (down 2.3 percent) and Food & Beverage (down 0.9 percent) departments, on a per-available-room basis.

Overall, despite the year-on-year decline in GOPPAR, profit conversion at hotels in the UK in September remained relatively strong at 42.8 percent of total revenue.

In addition to the 0.2-percentage-point decline in room occupancy in September to 85.0 percent, hotels in the UK recorded a 1.1-percent drop in achieved average room rate, which fell to £124.44.

The drop in volume and price this month was led by the commercial segment, which suffered a 2-percent decrease in the achieved rate in the corporate sector to £119.62.

“Whilst hoteliers across numerous markets in the UK would have been glad to see the back of the quieter summer period, unfortunately, the return to business as usual has been blighted by a return to the challenging trading conditions of early 2018,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA at HotStats. “This is unsurprising due to the relatively stagnant UK economy, with GDP growing by just 0.5 percent in Q3 2018, and the UK being slow to come back to work following such a celebrated summer period.”

In contrast to the performance of the total UK, hotels in Liverpool recorded a robust month of profit growth in September as the city welcomed the 2018 Labour Party Conference.

The burgeoning demand levels enabled hoteliers in the River Mersey city to leverage achieved average room rate, which increased by 11.8 percent in the month to £88.64, the second-highest rate recorded in the city in 2018. The growth in rate fuelled an 11.4-percent increase in RevPAR in September to £75.39.