June provincial hotel profitability might not last, warns TRI

By Lorraine Heller

- Last updated on GMT

Related tags: Cent increase, Hotel, Profit

Profitability in provincial hotels role 5% in June
Profitability in provincial hotels role 5% in June
June was the 19th profitable month in a row for hoteliers in London, while it was the first profitable month since January for provincial hotels, according to the latest HotStats report from TRI Hospitality.

However, despite the 5.3 per cent increase in profitability achieved in the provincial market last month, TRI cautioned that this could just be a ‘blip’ on the scale as hotels around the country continue to struggle.

“Despite the growth in June, year-to-date profit per room levels remain approximately 1.7 per cent behind the same period in 2010,” said Jonathan Langston, managing director of TRI Hospitality Consulting.

“Whilst we are keen to toast the successes of provincial hotel performance and hope that June is the catalyst for a return to growth, we are all too aware that it is entirely possible that the strong performance this month may just be a blip in the right direction.”

Provinces: RevPAR boosts performance

The overall performance of provincial hotels in June was “strong”, said TRI. Total Revenue per Available Room (TrevPAR) increased 3.5 per cent compared to last June to reach £101.47, boosted by a 5.5 per cent increase in RevPAR and a 3 per cent increase in food and beverage revenue.

This was this first time since January 2011 that provincial hotels have recorded an increase in profitability levels, with Gross Operating Profit per Available Room (GOPPAR) reaching £35.42.

However, the performance of some of the stronger provincial markets helped to lift that of the weaker ones that had continued to record a negative result, said TRI.

“The overall growth belies the pain which some city markets continue to suffer,” noted the research group.

Cities that suffered RevPAR declines included Glasgow (-11.7 per cent), Liverpool (-9.9 per cent) and Cambridge (-5.4 per cent).

On the other side of the spectrum, the markets in which the greatest margin of growth was achieved included Bristol (+10.3 per cent), Edinburgh (+13.2 per cent) and Manchester (+29.9 per cent).

London – hits new heights

Performance in London is once more a completely different story.

In June, hoteliers in the capital recorded an increase in GOPPAR of 17.6 per cent to £94.12 from £80.02, which was primarily driven by a 15.1 per cent increase in RevPAR to £132.05.

This represented the highest margin of GOPPAR growth in the capital since September 2010, said TRI.

The June revenue growth was mainly driven by a 12.6 per cent increase in average room rate to £147.81 from £131.31, said TRI.

"London hoteliers seem to be infallible at the moment. They have now convincingly shrugged off the recession to hit new heights," said Langston.

"Whilst the ONS has reported another quarter of limited economic growth in the UK, the growth in revenue and profitability at London hotels has been leveraged by the multi-national origin of both business and leisure visitors to the capital. Added to which, the packed summer season of events in the city continued with accommodation demand derived from major events including Wimbledon, Hard Rock Calling, Taste of London and Royal Ascot.

Related topics: Hotels, Hotel Trends, Trends & Reports

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