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London hotel occupancy highest on record

By Becky Paskin , 25-Aug-2011

Room occupancy in London hotels reached a record-breaking 92.4 per cent in July – the highest figure ever for the capital.

The result equated to a 0.6 per cent year-on-year increase in occupancy for the month, up from the 91.8 per cent achieved in 2010, according to TRI Hospitality Consulting’s latest HotStats survey of 550 hotels across the UK.

In addition, hoteliers in the capital charged their highest room rates since records began with the average rate clocking up £148.65, an increase of 0.6 per cent on the previous high which was achieved in June.

The results meant revenue per available room (revPAR) increased to £137.33 for the month, a 5.1 per cent increase on July 2010 (£130.69). Gross operating profit per available room (GOPPAR) shot up by 3.8 per cent to £94.53 from £91.04.

Jonathan Langston, managing director of TRI Hospitality Consulting, said the record was partially due to the timing of Ramadan in August, meaning Middle Eastern visitors chose to fly in July instead, and the attraction of London as an Olympic city in the run up to the 2012 Games.

"This is way beyond forecast expectations, but who would have predicted a year-on-year increase on a plus 90 per cent occupancy?” he said. “But that’s what London is all about at the moment. There is a buzz across the capital as millions of people are coming to see what the 2012 Olympic city has to offer."

An increased demand from Middle Eastern guests at five star properties such as W Hotel and the Corinthia, saw an unprecedented uptake in four and three-star hotels that are typically represented in the survey.

"With results defying expectations, it’s difficult to forecast what is going to happen in London and even though there will be less demand from Middle Eastern guests due to the timing of Ramadan, further growth in London cannot be ruled out,” Langston added.

Provincial ancillary sales fall

But despite London hoteliers’ record month, those in the provinces saw profitability fall by almost the same amount (3.7 per cent).

Slight increases in occupancy (0.7 per cent), room rate (0.7 per cent) and revPAR (1.6 per cent) were not enough to offset rising costs and a decline in ancillary spend for provincial hoteliers.

Revenue from food and beverage sales, meeting room sales and leisure sales all declined for the month, attributing to a year-on-year drop of 0.1 per cent in total revenue per available room (TrevPAR).

“Whilst the overall picture for hotels in the Provinces is not encouraging, pockets of positivity still remain. That said, with inflation levels currently at 5 per cent and utility costs widely reported to be set for increases of up to 25 per cent, growth in profitability levels for Provincial hoteliers is going to become even more of a challenge.”

The North East was hit hardest during July with profitability per room down 7.5 per cent. In contrast, the North West saw profitability increase by 3.1 per cent thanks to a 4.9 per cent rise in revPAR.

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