Mixed fortunes for UK hotel sector in 2011 as London-Provinces gap widens

By Luke Nicholls

- Last updated on GMT

Related tags: Cent increase, Average room rate, Hotel

TRI Hospitality Consulting's HotStats survey looks at 550 full-service hotels across the UK
TRI Hospitality Consulting's HotStats survey looks at 550 full-service hotels across the UK
With another year plagued by a poor economic backdrop, hotels in London were able to record a second consecutive year of profitability growth in 2011, but provincial properties suffered a fourth successive year of profit decline.

According to the latest HotStats survey of 550 full-service hotels across the UK by TRI Hospitality Consulting, last year saw a 4.7 per cent increase in profit per room in the capital, primarily due to a 6.1 per cent increase in RevPAR.

“London hotels have again outperformed expectations by showing profit growth in 2011,” said Jonathan Langston, managing director of TRI Hospitality. “While the profit growth was more moderate than in 2010, it shows that hotels can buck the economic trends.

“The 13.9 per cent increase in profitability levels achieved in 2010 was always going to be a hard act to follow, but London hoteliers have managed to exceed expectations, primarily due to a strong period of operation during the second quarter of the year.”

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Year-on-year profit decline

The increase in RevPAR was led by a 7 per cent increase in the achieved average room rate for London hotels to £131.03 from £122.45 during the same period in 2010. But there remains a level of concern over London’s hotel sector this year.

Langston added: “However, the annual increase for hotels in the capital was tainted by the 9.2 per cent decline in profit per room in the city in December, which represented the third consecutive month of year-on-year profit decline for London hoteliers in 2011 and was the greatest monthly year-on-year drop in this measure for hotels in the capital since August 2009.”

Hotels in the Provinces

The HotStats survey went on to reveal that, while growth in both occupancy and average room rate contributed to a 1.5 per cent increase in RevPAR, overall profit per room in the Provinces declined by 3.2 per cent during 2011.

Provincial hoteliers faced a number of challenges in 2011, which began with the country blanketed in snow and were sustained by the economic uncertainty which has shrouded the UK for much of the year.

“The hangover from ‘The Big Freeze’ in December 2010 and the fresh snowfall in February 2011 meant that Provincial hoteliers failed to get started this year,” added Langston. “And with the timing of the Royal Wedding and the Easter break there was little chance for them to create any sort of momentum.”

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Hope on the horizon

For the second consecutive year, the growth in achieved average room rate was primarily due to increases in the Best Available Rate (+2.8 per cent), leisure (+0.2 per cent) and group (+2.6 per cent) segments, with further declines suffered in the corporate (-0.3 per cent) and conference (-1.7 per cent) segments, highlighting the challenges which remain in the commercial sector.

But there remains hope on the horizon for the Provinces, insists Langston. “Despite the overall decline in headline performance levels across the Provinces, there continues to be some good news in primary locations such as Manchester, Brighton and Edinburgh, which all finished the year with positive results.

"While Provincial hoteliers will continue to face challenges, it is hoped that 2012 will provide the opportunity to recover some lost ground.”

Related topics: Business, Hotels, Trends & Reports

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