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UK hotels clawing back profitability

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UK hotels clawing back profitability

UK hotels saw a second consecutive month of profit growth in November, with the sector poised to achieve another positive year’s trading.

According to the latest data tracking full-service hotels from HotStats, building on October’s total gross operating profit per available room (goppar) gains, the UK’s hotels have fought back to profitability following the 4.9% year-on-year decline recorded in the first quarter of 2018.

Now having chalked up five months of year-on-year profit growth, including two consecutive monthly increases in October (up 9%) and November (up 2.3%), hotels have now recorded a 1.1% increase in goppar year-to-date 2018.

The growth in profit in November was led by increases across all revenue centres, including rooms (up 3.1%), food and beverage (up 3%) and conference and banqueting (up 3.2%), on a per-available-room basis.

As a result, total revenue per available room (trevpar) increased by 3% to £151.27. The solid November performance put year-to-date trevpar at 2.1% above the same period in 2017, at £142.44.

Growth in revenue in the month was supported by cost savings, which included a 0.3-percentage-point drop in payroll to 27.5% of total revenue.

The positive movements in revenue and cost enabled hotels to record a profit conversion of 38.1% of total revenue for the month. While this is slightly below the conversion recorded in November 2017, at 38.3% of total revenue, it is in line with the year-to-date figure.

Growth in rooms revenue in November was led by an increasingly rare increase in both room occupancy, which grew by 0.6 percentage points to 79.1%, as well as a 2.4% increase in achieved average room rate, which increased to £120.03 for the month.

Michael Grove, director of intelligence and customer solutions, EMEA, HotStats, said: “While other investment sectors, particularly retail, appeared to wobble ahead of the Christmas break and the unknowns of 2019, the UK hotel market is remaining resilient. The stronger performance in the second half of 2018 means hotel owners and operators in the UK are all set for another year of profit growth following the 5.1% increase in 2017.”

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