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Hotels in the UK Suffer from the Declining Profit in April 2018

News April brought mixed results to hotels in the UK. Even soaring temperatures didn’t help to reach the level of profit of April 2017, and so the total revenue went down, featuring a decline of 0.9% in gross operating profit per available room. TrevPAR was growing in April 2018 compared to the year-old results, achieving a growth of 0.6%, but that was not enough to overcome the rising costs.

The rising costs, naturally, had their impact on the profit per room of hotels in the UK, making it fall by 0.9% in April 2018 to £47.98. Therefore, April became the sixth consecutive month of year-on-year profit declines. It is important to mention that growing costs were not the only reason for the falling profit. The overall performance of hotels across the country leaves much to be desired, and main metrics continue their slow downward trend. For example, the UK hotels featured a decline in room occupancy of 0.9% in April to the level of 77.8%. This decline completely wiped out the increase in the achieved room rate of 0.8%, resulting in a drop of RevPAR of 0.3% to £87.59.

The corporate segment continues playing its crucial role for hotels in the UK. In April, there was a decent uplift in the conference segment (+12.6%). The corporate segment posted nearly flat results (+0.1%), while leisure and group tour segments were falling by 4.2% and 1.6% consequently. The latter is quite surprising, taking into consideration warm weather. It is obvious that demand for hotels in the UK has softened in 2018. Experts name several reasons for that, including Easter timing, colder weather, and the slowing rate of the UK economy.

Brighton hotels were among the best performers in the country. However, just like many other hotels on the south coast, local hotels mostly benefited from the growing demand of the commercial sector and didn’t see any growth in the number of leisure tourists. The average room rate of hotels in Brighton was falling in April by 1.6% to £107.03, but the city had more visitors because of the annual IATEFL event. Naturally, this caused growth in the residence conference and corporate sectors by 5.2% and 97.0% respectively. The average room rate increased by 4.1%, raising the total occupancy to 81.8%. RevPAR added 3.6% to £87.57, and GOPPAR increased by 6.7% to £53.03.

Hotels in Aberdeen also had a powerful month, with GOPPAR adding 34.0% in April 2018, even though the profit per room is still relatively low despite a successful month (£12.74). The increase in room occupancy estimated 6.3%, and the achieved room rate added 1.5% to the level of £60.85.


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