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Hotels in Heathrow Have Smaller Profit Despite Record Number of Passengers

Heathrow Airport may be the biggest gateway of the country with a record 5.27 million passengers in February, but that couldn’t prevent hotels in Heathrow from shrinking RevPAR. Profit per room fell by 4.3% in February 2017.

Hotels near Heathrow Airport were able to increase the average room rate by 2.0%, but it was not enough to offset the decline in occupancy of 1.7% together with rising costs, especially an increase in payroll of 5.5%.

Hotels in the West Midlands have enjoyed a significant growth of the number of visitors recently, but hotels of the region have not reached any increase in the profit rate. Hotels managed to grow the occupancy beyond the record result in February 2015 (71.9%), but that became possible because of a 10.4% increase of Room Costs of Sales. This metric includes various agent’s commissions, internet booking fees, reservation fees, etc. The cost of sales has reached 10.5% of the room revenue for hotels in the West Midlands. RevPAR (revenue per available room) added 3.9% for the month, but an increase of Rooms Payroll of 5.1% resulted in the fall of revenues.

At the same time, many destinations in the UK experience increased results. For example, hotels in Glasgow enjoy the strong start of the year. They’ve managed to reach profit in both January and February 2017. That is a very important achievement, given that Glasgow hotels posted declines in 2015 and 2016, of -6.2% and -1.3% respectively. The first two months of 2017 show the results on par with successful 2014 when the city hosted the Commonwealth Games.

The hotel market of Glasgow has had problems with the supply – as many as 880 new bedrooms have appeared on the market since 2014. The budget segment has suffered the most as over 70% of the new rooms belong to it. However, in February 2017 Glasgow hotels managed to reach the average room rate of £81.20, same as in 2014. RevPAR added 6.9% in January 2017, followed by the growth of 7.7% in February.

20.04.2017

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