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Hotels in South West of the UK Increase Their Profit

News Despite definite problems with profit per room in October 2016, hotels in the South West region managed to maintain their positions and enjoy the third consecutive year of growth.

The decline in profit of 5.0% in October was the largest monthly year-on-year drop. However, it was still not enough to put the profit level to the red zone. South Western hotels have posted positive results for the third year already. In 2014, the growth of the profit was 9.5%, followed by strong 2015 with the growth of 11.7%. GOPPAR (gross operating profit per available room) grew by 2.6% year-to-year in October 2016. The decline in profit this autumn was triggered by high results of October 2015, when the demand was powered by the Rugby World Cup. At that time, hotels in Exeter, Cardiff and Gloucester reached record results thanks to the sports event. The total increase of profit per room during last 36 months is truly tremendous - +30.9% to £32.51.

Edinburgh hotels enjoyed huge profit growth. The increase estimated 18.4% and was geared up by the influx of international visitors to the city. Consequently, occupancy added 1.9% and ADR (average daily rate) added 10.1%, causing the growth of RevPAR (revenue per available room) of 12.7% to £92.29. Hotels in Edinburgh have shown good results throughout the year in both business and leisure segments. The increased demand for hotel rooms in the city may be the result of increased capacity of Edinburgh Airport that managed to handle 1.1 million passengers in October 2016, showing the increase of 12.5%. The number of international passengers grew by 23.6% in October.

While Edinburgh hotels contributed to the total growth of profit in the South West of the U.K., hotels in Newcastle did the opposite. The growth of supply with 820 new guestrooms had its negative impact on the profit. The year-on-year decline of RevPAR estimated 7.1%, and profit shrank by 8.0%.


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