Hotel chains have reasons for optimism after strong showing in August

By Luke Nicholls

- Last updated on GMT

Related tags: Olympic games, London, Uk

The HotStats sample is composed of 592 hotels with an average hotel size of 177 bedrooms
The HotStats sample is composed of 592 hotels with an average hotel size of 177 bedrooms
As expected, year-on-year figures for London’s hotel market were down last month, due to the uplift during the 2012 Olympics. But when comparing August 2013 with the same month in the pre-Olympic year of 2011, profits and revenues were up significantly. 

According to the latest HotStats survey of 624 full-service UK hotels, total revenues per available room (TrevPar) dropped by 14.5 per cent last month, when compared with the Olympic year. Gross Operating Profit per available room (GOPPAR) was also down, by 27.7 per cent.

However, taking the Olympics out of the equation, the month was actually a strong one for hoteliers. TrevPar increased by 22.4 per cent  when compared with the pre-Olympic year of 2011, while GOPPAR was up by 49 per cent.

To put that into context, GOPPAR in Paris grew by approximately 33 per cent over the same period.

Rising rooms revenues and cost control allowed hoteliers in London to register profit growth in the rooms  department of over £20 per room let (2013 vs.  2011). Similarly, the strength of the conference segment  in August 2012 secured additional non-rooms revenues  and profits such as £11.20 F&B operating profits per  available room (which decreased by approximately 60 per cent this year). Consequently F&B profits (PAR) were recorded at 73 per cent above August 2011.

Provincial profits

Meanwhile, the Provinces showed a 13th consecutive month of total revenue growth and a sixth month of profits growth this calendar year.

RevPar in August increased by 7.4 per cent year-on-year thanks to an increase in ARR of 2.6% (equivalent to £1.79) and a rise in occupancy to 78.1 per cent. Consistent cost control helped to bring the total revenue growth of 6% to the bottom line with profits per available room amounting to £28.88.

Birmingham, which benefitted last year from  Olympic teams setting up their training base in the city, showed further growth this year: While total revenues increased by £2.11 per available room (+2.6%), overhead and payroll costs were diminished and enabled a 9.7 per cent GOPPAR growth.

Manchester experienced a GOPPAR increase of  19 per cent in August last year and was the second Olympic satellite city that did not suffer from any  post-Olympic year-on-year setback in the month.

Rising occupancy and higher ARR resulted in a rise in RevPar of 14.2 per cent. Furthermore, revenues from the sale of beverages increased by 22 per cent and helped to achieve a TrevPar growth of 10.3 per cent.

The HotStats figures echo those from business advisory and accountancy firm BDO, which claims that ‘momentum is building in the UK hotel sector’. According to BDO, UK hotels enjoyed another strong month in August, with year-on-year occupancy up in London and the regions, by 5.4 and 7.2 per cent respectively.

The HotStats sample is composed of 592 hotels with an average hotel size of 177 bedrooms.

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