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UK Hotels Suffer from Declines in May 2018

May was definitely not the best month for hotels across the UK as they posted a 4.3% year-on-year decline. Revenues were falling across all departments while rising costs made it even more challenging to run the business.

The decline in room revenues was not drastic and reached 1.2%, but other departments reported similar or even higher declines. Food and beverage department posted a decline of 2.0% and conference and banqueting dropped by -3.5%. The total revenue of hotels in the UK fell by 1.3% in May 2018. The result of revenue per available room (RevPAR) was similar – a decline of 1.2%. Occupancy lost 0.2% to 80.5% in total, and the average room rate lost 0.9% to £115.90.

Hotels in the UK are famous for their strong performance. The result of May 2018 is the second month of the room rate decline since October 2016. Hoteliers of the country have always been famous for their ability to maintain high guest room prices that were backed by strong occupancy. March 2018 was the first month of the dropping room rate, but poor weather conditions were the reason for the decline, so it was not taken into account.

While the commercial sector keeps posting robust results, leisure travel to the UK is shrinking. The decline of the Individual Leisure and Group Leisure segments estimated 2.9% and 4.8% respectively. Leisure travel demand remained quite weak despite a number of international events, two bank holiday weekends, and the Royal Wedding.

Major airports of the capital, London Heathrow and London Gatwick, served a record number of passengers in May. However, many of those passengers may have been departing the country due to bad weather. Hotels in Leeds were among the few exceptions with strong performance in May 2018. The city hosted the final of the Tour de Yorkshire, so no wonder why Leeds hotels welcomed a record number of guests. The occupancy went up by 6.5% to 79.1% in total, and the room rate added 1.5% to £80.59. RevPAR grew to £63.74 (the average result is £56.32), reaching the highest result in the latest five months.

A year after the terrorist attack on the Manchester Arena, the city’s hotels cannot be proud of their performance. The “Capital of the North” posted quite weak results with falling room occupancy (-2.8%) and room rate (+1.4%). Because of that, Manchester hotels reported a decline of RevPAR by 4.6% to £80.71. As revenues of the non-room departments were falling as well, the decline of the total revenue per available room was even more significant and reached -5.2% to £124.41. Rising costs made the gross operating profit go down by 12.7% to £44.56.

08.07.2018

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