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Hotels in the UK Fail to Become Profitable in February 2019
It looks like 2019 is a challenging year for the hotel industry of the UK. At least, in terms of profits received. Even though RevPAR was growing slowly in February, the increase was not enough to offset negative changes in profit, and so UK hotels suffered a second consecutive month of profit declines.
GOPPAR (gross operating profit per available room) grew to a level of £35.44, which is 4.4% lower than a year ago. In general, February only proved the negative start of 2019 for the hospitality industry of one of the most popular countries for travelers in the world. That being said, RevPAR (revenue per available room) did grow a bit and added 0.5%, but non-room revenues lost 0.4% in February and decrease their share in the total revenue to 36.2%. Food & Beverage lost 0.7%, Conference & Banqueting lost 1.3%, and Leisure segment was down by 0.5%.
Even though the year-on-year TRevPAR gained 0.2%, this growth was completely offset by an increase in payroll of 0.5 pts. to 32.8% in total. Here are the key metrics of the hospitality industry of the UK in February 2019. RevPAR added 0.5% to £78.8, TRevPAR added 0.2% to £123.42, payroll grew by 0.5 pts. to 32.8%, and GOPPAR lost 4.4% to £35.44. The profit also declines because of growing utility costs (+8.7% compared to February 2018) and Sales & Marketing expenses (+8.2% year-on-year). The results are definitely below the average performance of hotels in the UK in 2018.
Of course, some destinations performed better than others. For example, hotels in Cardiff had a successful month despite the obvious negative trend. Profit per room added 8.9% in February 2019 compared to February 2018. However, there is a reason for such success – Wales was hosting games of the 2019 Six Nations Rugby tournament. The profit was mostly boosted by growing average room rate (+8.7% to £84.37). The Welsh capital achieved this rate at the expense of room occupancy that declined by 3.3%. TRevPAR grew by 6.0% to £100.18, and GOPPAR added 8.9% to £27.29.
Sadly, not all major cities in the UK performed well. Edinburg hotels had one more challenging month to deal with. Even though the city was also hosting several games of the 2019 Six Nations Rugby tournament, hotels in the capital of Scotland failed to achieve any positive result. GOPPAR dropped by 27.7%, marking three consecutive months of profit declines. RevPAR lost 10.3% to £67.16, and TRevPAR fell by 6.6% to £102.57. Growing payroll, utility costs, and labor costs made profit drop by tremendous 27.7%.
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