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Warm Weather Helps Hotels in the UK to Stay Profitable in August

News August was another good month for hotels across the UK, bringing a year-on-year increase in profit of 9.2%. The weather was one of the biggest factors in driving the demand from both foreign and domestic tourists. Higher than average temperatures made many destinations in the country even more attractive, resulting in higher profits for hotels.

This summer was, in general, profitable for hotels in the UK. Both July and August had higher than average year-on-year profit growth of 7.2% and 9.2% respectively. Leisure segment was mostly responsible for the growth in GOPPAR (gross operating profit per available room). The share of leisure guests estimated 40.6%, which is significantly higher than the average of 32.1% during July 2017-July 2018. Individual leisure segment was growing faster than group leisure (3.4% and 1.3% respectively).

In total, the increase in room occupancy added 2.7% in August to the level of 84.8%. Achieved room rate was also growing, adding 4.6% to £118.84. Naturally, these important metrics boosted RevPAR that added 8.0% to £100.72. Non-room revenues were growing as well. For example, food and beverage segment added 2.1%, helping TRevPAR add 5.9% to £142.88.

While the Bank Holiday had somewhat mixed results, the rest of the month was distinguished by the warm weather in the UK, helping hotels to attract more guests. August is traditionally a challenging month for the hospitality industry of the United Kingdom, but this year helped to break that rule. However, not all destinations performed equally well. Hotels in Heathrow Airport suffered from a decline in profit of 2.5%. This happened despite the incredible capacity of Heathrow Airport that served 7.5 million passengers in August.

Even though hotels in Heathrow managed to increase their occupancy by 1.7% to 87.7%, this was achieved at the sake of a lowered room rate (-0.4% to £69.87). RevPAR was still positive and added 1.6%, but increased costs wiped out that growth, leaving hotels with the drop in profit of £25.74.

When talking about best performers, it is important to mention hotels in Edinburg. In August, the city hosted the Fringe Festival. The famous event attracted almost 3 million guests to the city. During the festival, hotels in Edinburg raised the average daily rate to £202.62, which is almost £70 higher than the result of August 2017. RevPAR added 4.3% to £192.08, and GOPPAR added 4.1% to £134.62.


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