Record Revpar Fuels Profit Growth At UK Hotels

Record RevPAR levels helped hotels in the UK to maintain their strong period of top and bottom line growth in 2017, as the 4.4% year-on-year increase for the month fuelled a 3.8% increase in GOPPAR, according to the latest worldwide poll of full-service hotels from HotStats.

The record RevPAR levels, which hit £105.28 and exceeded the previous high of £103.78 recorded in September 2016, were helped by a 0.2 percentage point increase in room occupancy, to 85.3%, also a record for full-service hotels in the UK.

Despite the record RevPAR, the margin of growth in TrevPAR this month was limited to 3.0% and hampered by falling non-rooms revenues, including Food and Beverage (-1.4%) and Conference and Banqueting (-4.0%) on a per available room basis.

Profit & Loss Key Performance Indicators – Total UK (in GBP)

July 2017 v July 2016

RevPAR: +4.4% to £105.28

TrevPAR: +3.0% to £153.05

Payroll: + 0.0 pts to 25.3%

GOPPAR: +3.8% to £66.12

That said, cost savings helped to offset the decline in non-rooms revenue, which included a 0.1 percentage point reduction in Payroll, to 25.3% of total revenue. As a result, hotels in the UK recorded their highest GOPPAR of the year so far, at £66.12, equivalent to a profit conversion of 43.2% of total revenue.

“Despite recent reports that more than 7,500 hotel rooms have opened in the UK since the beginning of 2017, the highest number of additions since 2012, market performance is going from strength to strength led by room occupancy levels which are giddily high,” said Pablo Alonso, CEO of HotStats.

Bristol was one of the top performing markets in the UK this July. This was not only due to the annual Harbour Festival, which reportedly attracted more than 200,000 visitors this year, but also due to demand overflowing into nearby cities from major events in Cardiff.

The volume of demand helped hotels in the South West city to achieve a staggering 84.4% occupancy, which combined with an achieved average room rate of £93.97, contributed to a RevPAR of £79.31.

Whilst this was a strong performance, it did not surpass the record RevPAR of £85.05 achieved in the city in June, which was once again as a result of demand exceeding supply due to a major event in Cardiff (ie The Champions League Final).

“In addition to the South West city benefiting from a wealth of demand generators, its proximity to Cardiff and excellent transport links means that more and more hoteliers in Bristol are benefiting from displaced demand associated with major events in the Welsh capital. This month, demand was driven by Coldplay playing two dates at The Principality Stadium,” added Pablo.

Heathrow hoteliers also hit an annual high in July, as the airport recorded its best-ever single month in history, handling 7.53 million passengers, equivalent to an average of 243,000 passengers per day.

The bumper demand levels, which pushed room occupancy to 92.9% for the month, helped fuel a 6.7% increase in TrevPAR to £105.12, with non-rooms revenue comprising just 28.5% of total revenue.

The growth in total revenue, in addition to a 1.1 percentage point saving in payroll, to 25.9% of total revenue, helped Heathrow hotels record a 16.9% year-on-year increase in GOPPAR in July, to £43.92. This represented a profit per room peak for Heathrow hoteliers in 2017.