Hotels 'out of the worst' as revPAR and profits continue to rise

By Emma Eversham

- Last updated on GMT

Related tags: London, Hotel

The hotel sector is firmly back in recovery says HVS after all but two cities recorded revPAR gains
The hotel sector is firmly back in recovery says HVS after all but two cities recorded revPAR gains
Hotel experts say the sector is 'out of the worst' with revPAR and profits now both up on average at hotels across the UK.

The latest Hotel Bulletin, produced by HVS London in association with Zolfo Cooper and AM:PM, found that in Q3 of 2013 there had been average increase in revPAR of 8 per cent at hotels outside London with profit up 3 per cent. 

London's revPAR decreased by only 3 per cent in Q3 2013 while September's revPAR was up 9 per cent compared to the same month the previous year. 

In the regions, performance was strong, with the exception of Cardiff and Newcastle where revPAR fell by 4 per cent and 5 per cent respectively. 

The ongoing impact of the London 2012 Olympics on international tourists and this summer's fine weather helped bolster trade at hotels, said HVS London director Tim Smith, who said the sector was now 'over the worse'.

Year on year growth

"We are now confident enough to say that the recession in the UK's hotel sector is effectively now over based on year on year growth to both revenue and profitability. Performance has been strong in the regions, with hotels in Aberdeen, Bath, Belfast and Edinburgh recording double digit revPAR increases in Q3," he said. 

"The most encouraging fact about regional performance is that improvements have been quite broad based, in contrast with pockets of good performance recorded in recent years.

"Performance in London is also positive, as while hotels have recorded a 3 per cent decline in revPAR, demand has grown at a greater rate than supply and it is only average rates that have failed to match the one-off levels seen during the Olympics."

The report also found that bank funding was also found to be 'relatively accessible' for hoteliers wanting to open both first and subsequent sites, although was still proving to be difficult for less prime assets.

Valuations were also improving for transactions, but new openings were mostly being limited to budget hotels and limited service operations, accounting for 67 per cent of total new openings in Q3. 

"The key issue is that confidence has returned to the market, because trading and profits have risen. That confidence is shown by more bank debt available, more transactions and an improved trading situation at the hotels. Therefore, we are definitely out of the worst and in a period of recovery," added Smith. 

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