Final flourish secures UK hotels’ annual profit growth

A strong finish to 2018 secured a second consecutive year of GOPPAR (gross operating profit per available room) growth for UK hotels, according to the latest data from HotStats.

The UK recorded a 6.7% year-on-year increase in profit per room in December, helping hotels to a 1.6% YOY increase in GOPPAR for 2018. However this is down from the 5.1% YOY increase in GOPPAR set in 2017.

HotStats found that profit growth in December was led by increases in the rooms (7.2%) and food and beverage (1%) and came despite declines in conference and banqueting (-1.7%) and leisure (-2.8%) revenue, on a per-available-room basis. Despite the uneven contribution still resulted in a 5.2% uptick in TRevPAR in the month to £147.38.

It also revealed December’s increases in both TRevPAR and GOPPAR were not “overly impacted” by the 3% YOY increase in total labour costs on a per-available-room basis.

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

On a per-available-room basis, total overheads were found to be up for the year, growing 3.3% YOY. This came as a result of increases in “key undistributed operating expenses”, including admin (2.1%), property and maintenance (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.”

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