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Strong October for Hotels in the UK

October was another successful month for hotels across the UK that managed to reach improvements in all revenue-generating departments. Thanks to that and effective cost management, it became possible to reach a 9% year-on-year increase in profit per room.

Room occupancy added 2.3% to 83.5%, and hotels raised their rates by 5.3% to £122.92. This made RevPAR (revenue per available room) grow as well, adding 8.3% to £102.67. Moreover, hotels in the UK reported an increase in non-room revenues, such as Conference & Banqueting (+5.7%) and Food & Beverage (+4.3%). Improved metrics from all departments contributed to the growth of TRevPAR that reached £156.36 (+6.6%). Of course, that is significantly lower than the peak month of July when TRevPAR was £162.59, but it is still 10.4% above the result of October 2017, £141.58.

Such strong results of October were mostly driven by the growing commercial sector demand. Business travelers accounted for almost 40% of all booked rooms. School half-term holidays were the second most important reason for the success. That said, not all cities across the UK performed equally well. For example, hotels in Newcastle had to face difficulties driven by the growing costs. Payroll added 1% to 30.7% in total revenue, and overheads added 1.4% to 26.7% in total revenue.

Occupancy remained fairly strong and added 2.2% to 77.1%. However, room rates dropped by 2.3% to the average of £74.56. RevPAR ended up adding only 0.5% because of that, reaching £57.49. TRevPAR remained almost flat and added only 0.1% to £91.41. The growth in room revenues was the only reason for that – it was sufficient enough to offset the decreasing non-room revenues. The decline in Food & Beverage, for instance, estimated 1.6% to £29.74. As a result, profit per room (GOPPAR) decreased by 10.4% to £25.40. Newcastle hotels show long-term declines in profit within the last 12 months.

Opposite to Newcastle, hotels in Birmingham were among the best performing in the UK in October 2018. The city welcomed several conferences, such as the 2018 Conservative Party Conference, and that greatly helped the hospitality industry of the city. The event of the Conservative Party alone drew more than 11,000 visitors to the city. Consequently, hotels in “the second city in Britain” managed to boost their room rates by 5.6% to £97.52 and RevPAR – by 4.2% to £78.54. Profit per room added 8.5% to £55.37. That is not only the highest result in 2018 but also as much as 46% higher than the year-to-year profit of £37.91.

03.12.2018

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