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Hotel profits hit at the end of a summer of growth

29 October 2018 by
Hotel profits hit at the end of a summer of growth

Profit per room at hotels in the UK fell by 4% in September, as a summer marked by growth came to a halt and demand became more business-led.

That is according to the latest data tracking full-service hotels from HotStats. The drop in profit was primarily due to a 1.3% decline in rooms revenue, which fell to £105.77, in contrast to an increase in non-rooms revenue, including food and beverage (up 0.8%) and conference and banqueting (up 1.7%) revenue, on a per-available-room basis.

Total revenue per available room fell by 0.9% in the month to £159.66, the first decline since before the strong period of summer trading began back in May.

The fall in revenue was further exacerbated by rising costs, which included a one-percentage-point increase in payroll to 25.7% of total revenue, as well as a 0.6-percentage-point increase in overheads, which grew to 19.9% of total revenue.

On a departmental basis, rising costs contributed to falling profit levels in both rooms (down 2.3%) and F&B (down 0.9%) departments, on a per-available-room basis.

In addition to the 0.2-percentage-point decline in room occupancy in September to 85%, hotels in the UK recorded a 1.1% drop in average room rate, which fell to £124.44.

Overall, despite the year-on-year decline in gross operating profit per available room (goppar), profit conversion at hotels in the UK in September remained relatively strong at 42.8% of total revenue.

Michael Grove, director of intelligence and customer solutions, EMEA at HotStats, said: "This is unsurprising due to the relatively stagnant UK economy, with GDP growing by just 0.5% in Q3 2018, and the UK being slow to come back to work following such a celebrated summer period."

Liverpool on the up
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 city to leverage achieved average room rate, which increased by 11.8% in the month to £88.64, the second-highest rate recorded in the city in 2018. The growth in rate fuelled an 11.4% increase in revenue per available room (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%) and conference & banqueting (down 11.5%).

Despite the decline in non-rooms revenue, hotels in the city drove a 6% increase in total revenue per available room (trevpar) to £102.84.

Hot weather drives up hotel profit per room up 9.2% in August >>

Total revpar hits high at UK hotels in July >>

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