Profits fall for chain hotels in the East Midlands

Chain hotels in the East Midlands recorded a 7% year-on-year decline in profit per room in March, despite an almost uninterrupted period of growth since January 2014. The latest UK Chains Hotels Market Review from Hotstats found March also represented the first month in which revenue per available room (RevPAR) at East Midlands hotels dropped since the mid-2014s, falling by 5.6% on the same month last year to £42.90. The report said this was a result of a decrease in both room occupancy (3.4%) and achieved average room rate (0.6%). It said the the “significant” year-on-year drop in profit per room may suggest the market has reached its peak after a “very strong” period of sustained growth. Prior to March, on a rolling 12-month basis, gross operating profit per available room (GOPPAR) at hotels in the East Midlands grew by 22.4% from January 2014 (£19.51) to February 2016 (£23.88). Hotels in Edinburgh recorded a 7.9% increase in profit per room during the month, which contributed to a 5.4% year-on-year increase in GOPPAR for the first quarter of the year, to £20.02 from £19. Despite declines in food and beverage (2.7%) and conference and banqueting (8.3%), revenue on a per available room basis in March was offset by a 9.2% increase in RevPAR to £70.73 from £64.79, which helped drive a 5.6% increase in total revenue per room (TrevPAR). For the first quarter of the year, the 5.1% RevPAR increase was primarily been driven by a 4.9% uplift in achieved average room rate, which was been led by rate increases in the individual leisure (7.3%) and group leisure (21%) segments, indicative of growth in tourists to the Scottish capital. The report said the growth in this segment is further supported by the 37.6% increase in international passengers handled by Edinburgh Airport in the month, up from 358,450 to 493,200. Meanwhile, hotels in Manchester recorded a 3.3% increase in profit per room during the month - contributing to a 2.4% increase for the first quarter of 2016, from £34.94 in the same period of 2015 to £35.74. The report said: “Hotel performance in Manchester has gone from strength to strength in recent years. “Despite additions to stock in 2015 including the 208-bedroom INNSIDE by Melia and 330-bedroom Motel One Piccadilly, on a rolling 12-month basis, profit per room has increased by 9.3% over the last year, to £43.51 in the 12 months to March 2016, from £39.82 in the 12 months to March 2015.”