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Hotels see profit per room fall 5.1% in February

29 March 2018 by
Hotels see profit per room fall 5.1% in February

UK hoteliers cannot seem to catch a break, as the latest trading figures appear to show that despite revenue increases across a number of departments, year-on-year profit per room fell 5.1% in February.

This follows a challenging January and a lacklustre December performance, according to a worldwide poll of full-service hotels by HotStats.

"It's been a tough start to 2018 for hotels in the UK. After several years of consistent growth, the upward trajectory has stalled somewhat, which seems to be as a result of occupancy levels hitting a ceiling," said Pablo Alonso, CEO of HotStats.

"Now may be the perfect time for hoteliers to consider an alternative strategy, which focuses on searching for opportunities to increase non-rooms revenues, as well as preserving profit levels by reducing costs. This is, of course, easier said than done," he added.

Total revenue per available room (trevpar) increased by 0.2% last month, to £122.64, which was due to increases across all revenue departments, led by conference and banqueting, up 3.6%; rooms at 0.4%; and food and beverage up 0.2%.

The growth in rooms revenue at UK hotels in February was driven by a 1.3% increase in achieved average room rate, to £106.70, and was in spite of a 0.6-percentage point decline in room occupancy, to 73.0%.

Whilst the growth in top line revenue was subdued, it was entirely wiped out by escalating costs, which included a 1.0-percentage point increase in payroll to 32.5% of total revenue.

The Beast from the East battered Heathrow hotel's revenue, with trevpar dropping 5.3% year-on-year, to £79.77, due to plummeting rooms (-4.6%), food and beverage (-9.4%) and conference and banqueting (-5.2%) revenue, on a per available room basis.

The drop in rooms revenue levels at hotels at Heathrow Airport was led by a 3.2-percentage point decline in room occupancy, to 73.0%, coupled with a 0.4% decline in achieved average room rate, to £74.78.

"Heathrow airport is prone to flight cancellations during poor weather conditions, such as snow, ice or fog, and this can sometimes lead to a spike in local hotel performance if passengers are stranded in the area," Alonso commented. "However, the prolonged period of snowfall in February meant people just did not travel unless it was essential, leading to a drop in demand and consequent decline in profit levels."

Hotel profits hit by rising costs but Cardiff sees occupancy boost>>

Occupancy and revpar fall at UK hotels in December>>

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TagsFinance and Hotels
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