One year on and profitability levels in London are still rising – RevPar growth is once again lost in costs in the Provinces
London
12 months after London hoteliers recorded a dramatic return to profitability growth the capital continues to thrive, according to the latest Hot-
Stats survey from TRI Hospitality Consulting.
Following the massive decline in profitability levels experienced by hotels in London following the banking crisis in October 2008, November 2009 was the first month in which London hoteliers were able to increase profitability levels. At 7.5%, the margin of growth in November 2009 was a dramatic turning point from the declines experienced during the rest of the year and marked the beginning of a strong period of trading for London hoteliers.
This month, Gross Operating Profit per Available Room (GOPPAR) increased by a further 10.7% to £85.38, boosting the calendar year average to £68, a figure which is 14.7% higher than the year-todate average of 2009. Meanwhile, Total Revenue per Available Room (TrevPAR) grew by 8.4% to £168.20 from £155.14 in 2009.
November is typically a strong corporate month in the capital, illustrated by the above average achieved room rate, at £138.10 against a year-todate average of £123.95. In addition, major events in the capital fuelled significant increases in achieved room rates in the non-discounted rack rate (+21.6%) and leisure (+19.4%) sectors, due in part to the World Travel Market exhibition at ExCeL, which attracted approximately 27,000 visitors over a four-day period and the success of the ATP World Tour tennis finals at the O2 which boasted an attendance of more than 250,000 people over an eight day period.
The draw of London as a world-class destination for business and leisure visitors as well as major events is undeniable. Undeterred by strikes on the Underground, student fees protests and the heaviest November snowfall in 17 years, hoteliers in London have once again recorded significant increases in profitability; and long may it continue,” said David Bailey, deputy managing director, TRI Hospitality Consulting.
Provinces
In contrast to the rapid return to growth and strong period of trading in the capital, hotels in the Provinces suffered further losses as cost levels
continue to impact the bottom line, according to the latest HotStats survey.
Despite a 3.6% increase in Revenue per Available Room (RevPAR), to £49.87 from £48.15, TRI’s unique HotStats survey revealed that GOPPAR
levels actually fell by 1.1% to £29.81 from £30.13, which is on the back of a 12.8% decline in profitability during the same period in 2009.
For provincial hoteliers, RevPAR growth primarily remains in volume as the corporate sector continues to return, which, during November,
resulted in a 1.9 percentage point increase in room occupancy levels to 70.7%.
However, evidence of the challenges which remain in the Provincial market are highlighted in the decrease in ancillary spend this month, which
meant TrevPAR movement was reduced to an increase of just 1.1%, against the 3.6% increase in rooms revenue. This was due to a 1.1% decline
in food and beverage revenue per available room, to £30.51 and further impacted by a 12% drop in meeting room revenue per available
room.
This movement leaves year-to-date profitability levels in the Provincial hotel market approximately 0.7% behind last year.
Across the UK, hotel performance remains mixed, but it is typically those cities which are able to accommodate major conference, exhibition
and sporting events which are able to find some respite from the ongoing challenges in the market.
Following the success of the Ryder Cup, Cardiff hoteliers picked up where they left off in October, with a 4.5% increase in GOPPAR to £40.87 from
£39.12, thanks in part to the demand created by the rugby Autumn Internationals. Similarly, in Manchester, events at the recently renovated Manchester Central, including the Chartered Institute of Personnel and Development (CIPD) Annual Conference & Exhibition, resulted in a GOPPAR increase of 2.4% as RevPAR grew by some 6% on the back of a 7.5% increase in achieved average room rate.
In contrast, the poor weather towards the end of the month crippled the Scottish transport infrastructure and Edinburgh Airport was closed for
several days hampering international arrivals. As a result, declines in both volume and rate caused GOPPAR in the Scottish capital to drop by 14.4%.
