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Hotels in London Suffer from High Costs

News 2012 is told to be a good year for hotels in London, especially when the city hosts the Olympics. Indeed, the hotels in the capital of the UK show better results when compared to the statistics of 2011, but there is some negative impact that doesn’t let the hotels to improve their revenue levels significantly. This information has been presented by TRI Hospitality Consulting, which has reviewed 560 hotels across the UK.

Hotels in London featured the growth of RevPAR in January and February, which are usually considered low demand months. This is the result of the growth of occupancy (+1.1%) to the level of 75.4% and the increase in average room rates to £124.77. The growth of these two figures has provoked the growth of TrevPAR of 2.5%. However, the profit added only 1.7% or just £0.91. The reason for this is in the substantial growth of costs across numerous departments of London accommodations. For example, the direct expenses of rooms department increased by 5% to the level of £13.98 per one booked room. The food and beverage departments show the rise of costs of 0.7%, decreasing the level of revenue to 21%. Finally, the growth of energy costs of 0.4% has increased their share in the total revenue to 3.4%.

Currently the profit level per room of hotels in London estimates £54.30. However, this is 3 times higher than the profit of hotels in the UK province. While London hotels are very efficient balancing between room rates and costs, their provincial colleagues still cannot get rid of the negative consequences of the economic downturn. Hotels in provincial UK cities feature declines across all measures. RevPAR fell by 0.6%, TrevPAR decreased by 2.3%, declines in food and beverage revenues estimated 3.8%. The total profit per room fell by 10.2%.


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