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Hot Topics > Hotel Trends

UK hotels struggle through fourth annual decline in February

By Lorraine Heller , 24-Mar-2011

February has been the hardest month for business in hotels outside of London since the bout of bad weather in January last year, according to the latest data from HotStats.

February is traditionally a slow month for hotels, and this is the fourth consecutive year where profitability has fallen during the month in the UK’s provincial hotels.

Revenue per available room (RevPAR) grew by 0.8 per cent to £44.32 in February 2011, although gross operating profit per available room (GOPPAR) declined by more than 12 per cent. This was primarily as a result of an increase in payroll levels and a decline in total revenue per available room (TrevPAR), said TRI Consulting, which publishes the HotStats data.

“This represents the greatest margin of profitability decline for provincial hoteliers since poor weather severely impacted headline performance levels across the UK in January 2010, causing GOPPAR levels to plummet by approximately 19 per cent.”

“Having fought back from the decline in RevPAR levels since the onset of the current economic downturn, provincial hoteliers are facing a new challenge in 2011 as total revenue levels are impacted by a reduction in discretionary spend and payrolls levels remain high to accommodate the recovery in volume,” said Jonathan Langston, managing director of TRI Hospitality Consulting.

Growth in the corporate and leisure sectors resulted in a boost to average room rates in the provinces of 1.3 per cent.

London hotels

As always, the London hotel scene showed a very different picture, with profitability remaining stable in the capital’s hotels.

Room occupancy in London declined, but TRI said this is likely a sign that hoteliers have successfully managed volume in order to leverage rate and achieve RevPAR growth of 3.3 per cent to £91.39.

The real success for London hoteliers last month was their ability to maintain profitability levels against the high watermark achieved in February 2010, when GOPPAR soared by 12.4 per cent during the capital’s resurgence, said the analyst.

“It was always going to be hard for London hoteliers to equal the strong performance of 2010 and the year has begun with consecutive months of volume decline. That said, profitability levels during February have once again remained stable thanks to astute yield management,”

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