Year-on-year profitability levels at London hotels in- creased by close to 17% in May as the capital hosted an assortment of sporting, cultural and political events, according to the latest HotStats survey.
Year-on-year profitability levels at London hotels in- creased by close to 17% in May as the capital hosted an assortment of sporting, cultural and political events, according to the latest HotStats survey.
The TRI Hospitality study, which encompasses approxi- mately 550 full-service hotels across the UK, showed that after the Royal Wedding weekend failed to deliver the anticipated trading boost, headline performance levels in May were boosted by a return to strong levels of commercial demand as well as a number of major events.
Due in part to the state visit by the US President Barack Obama, the RHS Chelsea Flower Show and the Champions League Final at Wembley, hoteliers in the capital were able to leverage price, which resulted in a year-on-year increase in average room rate of more than 14% to £112.93 from £99.01 in 2010.
“In contrast to the outcome of the Champions League Final, the performance of the London hotel market is becoming more and more difficult to predict. Following the 10.7% year-on-year growth in profit per room in the capital in May 2010, it was difficult to conceive that the market would once again record such an excep- tional level of growth,” said Jonathan Langston, manag- ing director, TRI Hospitality Consulting.
According to the unique HotStats survey which allows the analysis of hotel performance on more than 65 lines of profit and loss, despite the strong rooms reve- nue performance, a lower level of growth in Total Revenue per Available Room (TrevPAR) in May (+11.2%), was due to a more measured increase in secondary sources of revenue, such as food and beverage per available room (+5.2%) and meeting room revenue per available room (+8.1%).
Whilst year-on-year TrevPAR levels grew by 11.2% to £155.09, year-on-year Gross Operating Profit per Available Room (GOPPAR) at London hotels increased by 16.9% to £77.49 during May, equivalent to a profit conversion of approximately 50% of total revenue. The growth in profitability levels was helped by further re- ductions in payroll levels as a proportion of total reve- nue, to 22.9% from 24.2% of total revenue.
“The economy of London and strength of the hotel market appears undeterred by happenings not only in the rest of the UK, but across Europe and the world,” said Langston.
TRI Hospitality Consulting provides a wide range of services to clients in the hotel sector. It has offices in London, Dubai and Madrid.
For more information contact:
Jonathan Langston, managing director 020 7892 2201