Many UK hotels still “fighting a losing battle”, reveals market data

By Lorraine Heller

- Last updated on GMT

Related tags: London hoteliers, Profit, Percentage point, Uk

Provincial hotels rely on corporate business
Provincial hotels rely on corporate business
Hotels in some of the major markets in the UK continue to face an uncertain future as they are still unable to increase their corporate rates

According to the latest HotStats report from TRI Hospitality Consulting, the September performance of hotels in the provincial UK is clearly divided by their success in the corporate sector.

“There is a distinct contrast between those markets in which hoteliers have been able to increase the value of rates in the commercial sector and those which have not,” writes the September 2010 report on chain hotels.

“As the primary market sector and revenue stream for a number of markets across the UK, provincial hoteliers find themselves having to diversify to other sectors or discount further in an attempt to attract greater volumes of demand.”

Some of the major markets in the UK are still “fighting a losing battle” in this regard, such as Bristol, Leeds, Nottingham, Coventry and York.

However, other markets – including Newcastle, Cardiff, Swindon, Southampton and Portsmouth – have managed to achieve a year-on-year increase in price.

Profits still creep up

Overall, hotels in the provincial UK recorded a 2.7 per cent increase in Gross Operating profit per Available Room (GOPPAR) in September this year, compared to last year.

This contributed to the third quarter being the first time this financial year that GOPPAR increased at provincial hotels.  In the first quarter this year, GOPPAR had decreased by 5.1 per cent, followed by a 1.2 per cent decrease in the second quarter. 

London hoteliers are back in business

The picture is rather different in London, where successful room rate increases resulted in a massive 18.9 per cent hike in GOPPAR in September – the highest in the whole of Europe.

Total revenue per available room in London reached an average of £155.71 in September, compared to £137.01 last September.

London hoteliers further boosted their profitability by successfully managing costs, said TRI Consulting.  For example, there was an average 1.4 percentage point decrease in the ration of payroll to total revenue, to 22.4 per cent.

“What a difference a year makes,” said Jonathan Langston, managing director, TRI Hospitality Consulting.   

“In September 2009 London hoteliers were nursing declines in both volume and price and the outlook heading into the winter was bleak. But with a 19 per cent increase in GOPPAR, London hoteliers have regained any losses suffered during the same period last year and once again surpassed the monthly performance of 2008.”

Related topics: Business, Hotels

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