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Hotels in the UK Experience Problems in January 2018

The start of the year was definitely not easy for hotels in the UK. Raising cots, especially in payroll, eliminated all hopes for hotels of the region and led them to declines in profit. The year-on-year profit decline estimated 3.9% as we can see in the latest report by HotStats.

Occupancy was almost flat for hotels in the UK, dropping by only 0.2% to 64.6% in total. The average room rate was growing, featuring an increase of 0.8% to £102.58, and that helped to achieve a slight growth in RevPAR (revenue per available room) of 0.6% to £66.28. At the same time, some departments of the UK hotels performed successfully despite the overall weak result. For example, non-room revenues such as Conference and Banqueting (+6.0%) and Food & Beverage (+1.1%) posted promising results, contributing to the growth in TrevPAR by 0.8% to £103.86.

Sad to say, room related revenues were falling – the decline of profit per room was 0.5% to £44.86 in January 2018. This happened mostly because of the growth in room payroll by 3.1% and room expenses by 6.8%. Consequently, TrevPAR was positive as it is mentioned above, but GOPPAR (gross operating profit) was negative, -3.9% to £26.10. That said, January became the sixth consecutive month of the falling room occupancy. However, that doesn’t mean that the situation is truly devastating as the drop has been a minor one by now.

Not all cities in the UK followed the pattern described above. For example, hotels in Cardiff had a good month in terms of room occupancy that added 2.6% to 67.1% in total. However, that was reached at the expense of the falling average room rate (a decline of 1.9% to £69.00). January is traditionally a weak month for Cardiff hotels as it is a period of low demand with no events or large meetings in the calendar. RevPAR of local hotels added 2.1% to £46.32; TrevPAR was positive as well and added 1.1% to £73.57. However, with payroll growing, GOPPAR had a negative result of -1.6% to £9.02.

Newcastle hotels had similar results. The city’s hotel industry had to face a new challenge – the addition of nearly 1,000 rooms. Therefore, the occupancy fell down by 1.6% to only 60.7% in total. That is the lowest hotel occupancy on record since January 2016. Even the growing average room rate (+0.9% to £67.94) was not enough to offset the falling occupancy, so there’s no wonder why RevPAR was also negative, featuring a drop of 1.7% to £41.26. TrevPAR dropped by 2.3% to £66.47, and the decrease of GOPPAR was truly devastating, -19.8% to £9.00.

08.03.2018

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