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Strong end to 2018 bolsters hotels' profit growth

30 January 2019 by
Strong end to 2018 bolsters hotels' profit growth

A strong end to 2018 ensured that UK hotels enjoyed overall gross operating profit per available room (goppar) growth in 2018, although at a slower rate than the year before.

UK hotels recorded a strong 6.7% increase in goppar in December 2018, pushing year-on-year goppar growth for 2018 to 1.6%, according to the latest figures from Hotstats.

But that was still weaker than the 5.1% year-on-year increase in goppar set in 2017.

Profit growth in December was led by increases in bedroom (up 7.2%) and food and beverage (up 1%) departments and came despite declines in conference and banqueting (down 1.7%) and leisure (down 2.8%) revenue, on a per-available-room basis.

The uneven contribution still resulted in a 5.2% uptick in trevpar in the month to £147.38.

Hotstats also recorded a year-on-year increase in total labour costs on a per-available-room basis of 3% during December. Annually, they were also up 3% year on year.

Meanwhile, as a percentage of total revenue, payroll costs fell by 0.5 percentage points to 27.3% of total revenue in the month.

On a per-available-room basis, total overheads were up for the year, growing 3.3% year on year, with admin and general overheads up 2.1%, property and maintenance costs up 5.7% and utilities 9%.

Michael Grove, director of intelligence and customer solutions, EMEA, at HotStats said: "The UK hotel market is strong despite it being entrenched in the mire of Brexit and the impact on the economy as a whole. Regardless of the macro climate, and as evidenced by December's strong profit numbers, savvy hoteliers are wringing out as much revenue gained on the top line, leading to solid bottom-line growth."

December 2018 v. December 2017

Revpar: +7.5% to £88.37
Trevpar: +5.2% to £147.38
Payroll PAR: +3.0% to £40.17
Goppar: +6.7% to £56.88

Source: Hotstats

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