Advertisement
HotelsProperty

Profit per room for UK hotels falls in February

In response to the latest figures Pablo Alonso, CEO of HotStats, said it has been ‘a tough start to 2018’ for hotels in the UK

Year-on-year profit per room at UK hotels fell by 5.1% in February 2018, as cost increases continue to accelerate.

However, hotels in the UK successfully recorded a 0.2% year-on-year increase in TrevPAR, to £122.64, which was due to increases across all revenue departments, including rooms (+0.4%), food and beverage (+0.2%) and conference and banqueting (+3.6%).

The growth in room revenue 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%, as volume struggles to grow beyond the current record levels.

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

Advertisement

Additional cost increases were also recorded in overheads, which grew by 0.9-percentage points year-on-year, to 26.3% of total revenue, which was largely due to a 7.1% increase in utility costs, up to £5.55 on a per available room basis.

As a result of the movement in revenue and costs, GOPPAR at hotels in the UK fell by 4.8% year-on-year to £36.65 in February. This was equivalent to a profit conversion of 29.9% of total revenue.

Pablo Alonso, CEO of HotStats, said: “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.

“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.”

Check out our free weekly podcast

Back to top button