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Hotels in the UK Post Mediocre Profit Despite Stable RevPAR
January 2019 was a mixed month for hotels in the United Kingdom. Despite the increase in RevPAR (revenue per available room) of 3.4% compared to the same period a year ago, the profit level decreased by 2.6% because of higher costs. The country’s hotels managed to increase their revenue because of a slight increase in occupancy (+0.2% to 64.8%) and higher average room rate, which estimated £107.02.
Naturally, the growing occupancy and room rate made TRevPAR grow as well, achieving an increase of 2.4%. However, an increase in payroll by 0.3% to 35.4% and overheads by 0.6% to 28.6% had their negative impact on the profit, which ended up dropping by 3.1%. Here it is important to mention that January is traditionally the slowest month of the hospitality industry of the country, and the start of 2019 was no exception. The recorded level of GOPPAR for the month is only £26.10. This is a really low result because it is twice lower than the same metric 12 rolling months to January 2019 (£55.09).
In the future, hoteliers in the UK may face continuous problems regarding the squeezing margins. It may become even harder to stay profitable for them. For example, utility costs added 13.3% year-on-year in January 2019, reaching the level of £5.86 per room. This is 5.4% of total revenue. Other operating expenses, such as Sales & Marketing and Property & Maintenance are also growing, further decreasing profit.
Of course, there are some exceptions. For example, hotels in York managed to increase their profit per room by 3.7% year-on-year. However, GOPPAR doesn’t look very impressive even with this growth – only £6.40. Still, it is a positive change, especially taking into consideration that the leisure segment is the main force on the hospitality market of York. In January 2019, the North Yorkshire city enjoyed the growth in RevPAR of 6.6% to £46.74. Non-room revenues added 20.3% to £28.82.
Nottingham hotels, in their turn, couldn’t reach the results of York. Even though the year-on-year change of RevPAR is positive (+3.5% to £40.03), GOPPAR lost 4.8% to £9.62. Hotels in Nottingham also recorded the growth in non-room revenues, such as Food & Beverage (+1.3%) and Conference & Banqueting (+9.9%). However, rising costs all these attempts insignificant, leading the city’s hotels to profit declines. Payroll remained almost flat, losing 0.4% to 36.8% in total.
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