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.
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.”