Latest News
HomeRegional NewsEuropeEnd of summer coincides with profit hit at UK hotels
Hospitality

End of summer coincides with profit hit at UK hotels

Adelphi Hotel Liverpool.

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.

Profit 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 monthto £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.

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

September 2018 v September 2017

  • RevPAR: -1.3% to £105.77
  • TrevPAR: -0.9% to £159.66
  • Payroll: +1.0 pts. to 25.7%
  • GOPPAR: -4.0% to £68.26

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.

Despite the growth in rooms revenue, hotels in Liverpool missed the opportunity to drive non–rooms revenue this month, which fell across all departments, including food & beverage (down 5.9 percent) and conference & banqueting (down 11.5 percent).

Despite the decline in non-rooms revenue, hotels in the city drove a 6-percent increase in TRevPAR to £102.84.

The growth in revenue, as well as cost savings, which included a 0.6-percentage-point drop in payroll to 23.7 percent of total revenue, contributed to the 10.2-percent increase in GOPPAR for the month, which was recorded at £42.19.

Profit & Loss Key Performance Indicators – Liverpool (in GBP)

September 2018 v September 2017

  • RevPAR: +11.4% to £75.39
  • TrevPAR: +6.0% to £102.84
  • Payroll: -0.6 pts. to 23.7%
  • GOPPAR: +10.2% to £42.19

“The political party conferences are typically a huge benefit to hoteliers in the host city, and this month was no exception for properties in Liverpool,” Grove said. “However, the lack of revenue derived from non-rooms sources will be a disappointment to owners and operators and will be considered a missed opportunity.”

Further south, hotels in Cambridge suffered only their second month of GOPPAR decline in 2018, marring what has been a very positive period of performance so far this year.

Whilst profit per room at hotels in the university city dropped by 12.3 percent year-on-year in September to £65.53, it remained well above the year-to-date figure of £58.45.

The drop in profit was primarily led by a 3.8-percent slide in RevPAR, which was a result of a 1.0-percentage-point drop in room occupancy to 83.8 percent, as well as a 2.7-percent decline in achieved average room rate, which dropped to £123.21.

The year-on-year decline in top-line performance was primarily due to the absence of key events, which fuelled demand during the same period in 2017.

Profit & Loss Key Performance Indicators – Cambridge (in GBP)

September 2018 v September 2017

  • RevPAR: -3.8% to £103.24
  • TrevPAR: -4.8% to £145.32
  • Payroll: -0.1 pts. to 17.4%
  • GOPPAR: -12.3% to £65.53

In addition to the drop in rooms revenue, declines were recorded across all non-rooms departments and, as a result, TRevPAR for hotels in Cambridge fell by 4.8 percent year-on-year to £145.32.

And whilst hotels in Cambridge recorded a 0.1-percentage-point uplift in payroll, this cost remained relatively low at just 17.4 percent of total revenue, enabling profit conversion to be recorded at a strong 45.1 percent of total revenue.

Co-Founder & Chief Editor - TravelDailyNews Media Network | Website | + Posts

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.

Tags
28/03/2024
27/03/2024
26/03/2024
25/03/2024
22/03/2024
21/03/2024