UK Chain Hotels Market Review – October 2008
UK hotel profit drops by 9 per cent
“For most UK hoteliers the effects of the economic downturn were clearly felt in October. With fewer guests and higher operational costs, pressure on profitability was inevitable,” said Jonathan Langston, managing director, TRI Hospitality Consulting.
In the Provinces, average profit as a percentage of total revenue in October fell year-on-year from 37.6 to 35.1 per cent. An increase in the national minimum wage which came into force on 1 October may have contributed to the rise in costs. Provincial achieved average room rate dropped by 1.9 per cent to £73.72 which, combined with lower volume, led to an 11.2 per cent fall in daily IBFC to £36.88 per available room.
Profit grows in Liverpool and Newcastle
“Even in a recession there will be demand peaks, and hoteliers will be able adjust their rates accordingly to gain the maximum benefit,” said Langston.
Looking at the year so far, the first 10 months of 2008 show London still achieving positive albeit below-inflation revenue and profit growth. Total revenue per available room increased by 3.4 per cent to a daily figure of £137.28 and daily IBFC was up by 2.8 per cent to £63.90.
The Provincial data for the year so far shows a 1.4 per cent decline in total revenue to £100.04 per day per available room and daily IBFC PAR down by 5.3 per cent to £32.81.
Overseas spend down by 2 per cent
Visitors from Europe were up by 2 per cent to 6.6 million, while those from North America dropped by 21 per cent to 1.2 million. Visitors from the rest of the world were down by 7 per cent to 1.5 million, compared to the same three-month period a year earlier.
In more recent data, BAA, the operator of seven UK airports including Heathrow and Gatwick, reported handling 12.4 million passengers during October, a year-on-year drop of 6 per cent. Year to date, BAA´s UK airport traffic shows a decline of 1.9% for the ten months to October at a total of 125.8 million.
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