Long cold winter freezes profit per room at UK hotels

30 April 2018 by
Long cold winter freezes profit per room at UK hotels

The wettest March in a decade and unseasonal snow storms have added to the woes of UK hoteliers, driving down year-on-year (YOY) profit per room by 5.6%.

This follows a 5.1% decline in February and a challenging performance in January, according to the latest survey of full-service hotels from Hotstats.

"Spring failed to materialise in March and instead it was replaced with heavy snow fall and bone-chilling temperatures as the UK experienced its worst winter since 1991," said Hotstats chief executive Pablo Alonso.

"This had the double-whammy effect of causing a drop in top line performance as hazardous conditions meant the advice was not to travel, but also the bottom line was hit by high payroll costs, as it was way too late to adjust staffing levels, and the cold weather meant the heating had to stay on."

Total revenue per available room (trevpar) decreased by 1.4% to £129.69 as hotels suffered declines across all revenue departments, including rooms (-1.2%), food & beverage (-2.4%) and conference and banqueting (-5.5%) on a per available room basis.

A 0.6-percentage point decline in room occupancy to 75.2% was further exacerbated by a 0.3% drop in achieved average room rate to £109.91, which contributed to the 1.1% decline in revpar, to £82.61.

The poor weather led to demand from the leisure segment being the hardest hit, with a 3.9% year-on-year decrease in rate in individual leisure business and a 0.3% decline in rate in group leisure.

The revenue decrease was further exacerbated by rising costs, which included a 1.1-percentage point increase in payroll to 29.2% of total revenue. There was also a 0.9% increase in overheads, which grew to 23.4% of total revenue thanks to an 11.5% YOY spike in utility costs in March to almost 4% of total revenue.

At £5.15, on a per available room basis, utility costs for the month were more than 8% above the average in the rolling 12 months to March 2018.

Hotels see profit per room fall 5.1% in February >>

Consumers cut back on leisure spend at start of year >>

Occupancy levels in serviced apartment sector dip in first quarter >>

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