Hampton by Hilton Newcastle.
Growth in revenue was led by an 8.3-percent year-on-year increase in RevPAR to £102.67, which was fuelled by a 2.3-percentage-point increase in room occupancy to 83.5 percent and a 5.3-percent increase in average room rate to £122.92.
October was a banner month for hotels in the UK, as strong growth was recorded across all revenue-generating departments and driven by a range of demand sources. This mix helped push hotels to a 9-percent year-on-year increase in profit per room for the month, according to the latest data tracking full-service hotels from HotStats.
Growth in revenue was led by an 8.3-percent year-on-year increase in RevPAR to £102.67, which was fuelled by a 2.3-percentage-point increase in room occupancy to 83.5 percent and a 5.3-percent increase in average room rate to £122.92.
In addition to the growth in rooms revenue, hotels in the UK successfully recorded year-on-year increases in non-rooms revenues, including Food & Beverage (up 4.3 percent) and Conference & Banqueting (up 5.7 percent), on a per-available-room basis.
The growth across all departments contributed to the 6.6-percent year-on-year increase in TRevPAR for the month to £156.36. Whilst this was behind the 2018 peak of £162.59, recorded in July, it remained 10.4-percent above the year-to-date figure at £141.58.
“The robust top-line performance in October was led by demand from the commercial sector, which accounted for almost 40 percent of all accommodated roomnights,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats. “Demand levels were also supported by the ongoing political party conference season and leisure demand from school half-term holidays. And despite Storm Callum bringing severe flooding to parts of the UK, it was a relatively settled picture, which even included a royal wedding.”
Profit & Loss Key Performance Indicators – Total UK (in GBP)
October 2018 v. October 2017
- RevPAR: +8.3% to £102.67
- TRevPAR: +6.6% to £156.36
- Payroll: -0.8 pts. to 25.9%
- GOPPAR: +9.0% to £64.44
Cost savings also abetted the jump in GOPPAR. This included a 0.8-percentage-point drop in payroll, to 25.9 percent of total revenue, and a 0.2-percentage-point saving in overheads, to 20.6 percent of total revenue.
October’s strong growth helped push profit performance for the year back into positive territory, with year-to-date GOPPAR growth of 1 percent to £54.05.
The positive performance could have been even stronger had it not been for some challenges, including in Undistributed Operating Expenses, with year-on-year increases recorded in Administrative & General (up 3.3 percent) and Sales and Marketing (up 3.4 percent), on a per-available-room basis.
While the broader UK performed well, hotels in Newcastle continue to struggle, hurt by escalating costs. These included a 1.0-percentage-point increase in payroll, to 30.7 percent of total revenue, and a 1.4-percentage-point increase in overheads, to 26.7 percent of total revenue.
RevPAR in the city only grew 0.5 percent and was led by a 2.2-percentage-point year-on-year increase in occupancy to 77.1 percent. Conversely, average room rate dropped by 2.3 percent to £74.56.
Furthermore, the slim 0.1-percent increase in TRevPAR, to £91.41, was only due to growth in rooms revenue, which was sufficient to offset the decline recorded across non-rooms departments, including a 1.6-percent decline in food & beverage revenue, to £29.74 per available room.
Profit & Loss Key Performance Indicators – Newcastle (in GBP)
October 2018 v. October 2017
- RevPAR: +0.5% to £57.49
- TrevPAR: +0.1% to £91.41
- Payroll: +1.0 pts. to 30.7%
- GOPPAR: -10.4% to £25.40
As a result of the movement in revenue and costs, profit per room at hotels in Newcastle dropped by 10.4 percent in October to £25.40, which is equivalent to a profit conversion of just 27.8 percent.
A closer look at the data suggest that the issue for Newcastle hotels is more long term, illustrated by the ongoing decline in profit per room, which has fallen to £24.37 in the 12 months to October 2018 and is almost £5 lower than the £29.03 GOPPAR recorded during the same period in 2014-15.
“In short, hotels in Newcastle are suffering due to an untimely softening in demand, which has been further exacerbated by increasing costs,” said Grove. “This might well be a warning sign for hotel owners and operators in other provincial markets that it is becoming harder to convert revenue into profits.”
At the other end of the spectrum, Birmingham hotels were amongst the best performing in October as they welcomed a number of conferences, including the 2018 Conservative Party Conference, which attracted more than 11,000 delegates.
As a result, hotels in “Britain’s second city” were able to record an 8.5-percent year-on-year increase in profit per room, which grew to a 2018 high of £55.37, more than 46 percent above the year-to-date figure of £37.91.
Growth was primarily due to a 4.2-percent increase in RevPAR, which was fuelled by a 5.6-percent increase in average room rate to £97.52, a number that was only slightly below the annual high recorded in Birmingham, in September, of £97.64.
In addition to the increase in rooms revenue, growth was recorded across all non-rooms departments and, as a result, TRevPAR for hotels in Birmingham increased by 7.4 percent year-on-year to £119.02.
Profit & Loss Key Performance Indicators – Birmingham (in GBP)
October 2018 v. October 2017
- RevPAR: +4.2% to £78.54
- TRevPAR: +7.4% to £119.02
- Payroll: -0.7 pts. to 22.1%
- GOPPAR: +8.5% to £55.37
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
