Edinburgh.
GOPPAR for the month settled in at £35.44, a 4.4-percent year-over-year decline. This continued the downward trend in this measure since the start of 2019.
The UK hotel industry is off to a rough 2019. At least on the profitability spectrum. A slight increase in RevPAR in February was not enough to push hotels into the black, as the UK suffered a second consecutive month of profit decline, according to the latest data tracking full-service hotels from HotStats.
GOPPAR for the month settled in at £35.44, a 4.4-percent year-over-year decline. This continued the downward trend in this measure since the start of 2019.
Despite the 0.5-percent increase in RevPAR, non-rooms revenues dropped by 0.4 percent in the month to 36.2 percent of total revenue. The drop in ancillary revenues included declines in Food & Beverage (down 0.7 percent), Conference & Banqueting (down 1.3 percent) and Leisure (down 0.5 percent), on a per-available-room basis.
Still, hotels managed to eke out a small 0.2-percent gain in YOY TRevPAR, which has now increased in each of the past five months.
But the increase was wiped out by rising costs, which included a 0.5-percentage-point increase in payroll as a percentage of total revenue to 32.8 percent.
Profit & Loss Key Performance Indicators – Total UK (in GBP)
February 2019 v. February 2018
- RevPAR: +0.5% to £78.80
- TRevPAR: +0.2% to £123.42
- Payroll: +0.5 pts. to 32.8%
- GOPPAR: -4.4% to £35.44
The most major increase in overheads was in utility costs, which increased by 8.7 percent YOY to £5.98 per available room, equivalent to 4.8 percent of total revenue. This was closely followed by an 8.2-percent YOY increase in Sales & Marketing expenses.
As a result of the movement in revenue and costs, profit contribution at hotels in the UK was recorded at 28.7 percent of total revenue, which is well below the average in the rolling 12 months to February 2019, at 38.2 percent.
“While top-line numbers have actually been positive – albeit slightly – rising costs are having an adverse impact on flow through,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats.
In contrast to the performance of the total UK hotel market, February was a positive month for properties in Cardiff, as they scored an 8.9-percent YOY increase in profit per room. A key demand generator was Wales hosting England in the 2019 Six Nations Rugby tournament.
The growth in profit was led by an 8.7-percent increase in achieved average room rate to £84.37, as hoteliers in the Welsh capital gambled on driving rate at the expense of room occupancy, which fell by 3.3 percentage points in the month.
TRevPAR increased by 6.0 percent YOY, with beverage revenue comprising 9.3 percent of revenue. This is broadly in line with TRevPAR recorded in the rolling 12 months to February 2019, at £101.
The positive mood was helped further by a 1.5-percentage-point decrease in payroll as a percentage of total revenue.
Profit & Loss Key Performance Indicators – Cardiff (in GBP)
February 2019 v. February 2018
- RevPAR: +4.2% to £64.21
- TRevPAR: +6.0% to £100.18
- Payroll: -1.5 pts. to 30.8%
- GOPPAR: +8.9% to £27.29
Edinburgh was a different story. Despite Murrayfield Stadium hosting Six Nations rugby matches between Scotland and Italy and Scotland and Ireland, YOY GOPPAR in the Scottish capital dropped by 27.7 percent in the month, representing a third consecutive month of profit decline in the city.
RevPAR fell by 10.3 percent YOY, with ARR declining 9.2 percent YOY.
Further declines in non-rooms revenues contributed to the 6.6-percent decrease in TRevPAR to £102.57.
Revenue declines were further exacerbated by ballooning costs, which included a 2.1-percent increase in labour costs on a per-available-room basis, leading to a 3.2-percentage-point increase in payroll as a percentage of total revenue to 38.0 percent. Furthermore, YOY utility costs were up 21.2 percent, on a per-available-room basis.
Profit & Loss Key Performance Indicators – Edinburgh (in GBP)
February 2019 v. February 2018
- RevPAR: -10.3% to £67.16
- TRevPAR: -6.6% to £102.57
- Payroll: +3.2 pts. to 38.0%
- GOPPAR: -27.7% to £19.33
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.
