Profit Growth at UK Hotels Unabated by Election Uncertainty

GOPPAR (total gross operating profit for the period divided by the total available rooms) at hotels in the UK increased by 5.4% this month, in spite of the heightened uncertainty across the country as the snap general election ended in yet another hung parliament, according to the latest worldwide poll of full-service hotels from HotStats.

The year-on-year growth in GOPPAR this month was fuelled by a 6.2% increase in RevPAR, as hotels in the UK recorded a 0.6 percentage point increase in room occupancy, to 82.7%, as well as a 5.4% year-on-year uplift in achieved average room rate, to £122.23.

In addition to the uplift in room revenue (RevPAR), hotels in the UK recorded a 0.7% increase in Food and Beverage revenue, to £42.31 per available room, which contributed to the 4.5% increase in TrevPAR.

Cost savings, which included a 0.2 percentage point reduction in Payroll, to 25.7% of total revenue, enabled a high flow through from the top line to the bottom line and hotels in the UK subsequently achieved a 5.4% increase in GOPPAR, to £65.24.

“The UK hotel market would have been forgiven for stumbling a little in the messy aftermath of 8 June. However, the strong economic fundamentals of the UK remain and the hotel sector is buoyant, illustrated by the continued upward trajectory this month,” said Pablo Alonso, CEO of HotStats.

Hotels in London continued to perform strongly in June, with a 6.0% increase in GOPPAR for the month contributing to the 13.9% year-on-year profit per room increase for year-to-date 2017, to £75.15.

The potential impact on hotel performance from terrorist-related activity in the capital at the beginning of the month was more than offset by the 30,000-strong attendance at IFSEC International 2017 at ExCeL.

Furthermore, the capital continues to benefit from the drop in the value of Sterling following the Brexit vote this time last year, with both business and leisure visitors arriving in increasing numbers from major source markets such as North America and Europe.
Despite declines in Food and Beverage (-1.9%) and Conference and Banqueting (-5.8%) revenue at hotels in London in June, a 6.3% increase in RevPAR supported a 4.4% increase in TrevPAR, to £195.07.

“UK hoteliers are currently enjoying the benefits of Brexit, which has fuelled a record number of overseas visitors to the UK. The high demand levels have enabled room rates to be leveraged in the Individual Leisure, Group Leisure and Best Available Rate segments, with the rate premium flowing through to profit. This is great news for hotel owners and operators across the UK,” added Pablo.