HotStats UK Chain Hotels Market Review – April 2013

Despite a slight decrease in occupancy by 0.2% at a stable average room rate (ARR) of £135.29 bringing revenue per available room (RevPar) down by 0.2%, hotels in London experienced a profit increase of 1.6% for the month of April. This was achieved thanks to a 6.3% growth in revenues from beverages and a 3.3% increase in food revenues per available room, leading to a 0.8% increase in total revenue per available room (TrevPar) as compared to April 2012.

The residential conference segment made a contribution to TrevPar growth as it simultaneously grew in volume by 2.3% and in rate by 2.9% to £158.96. The volume contribution of the BAR segment decreased from 17.9% in April last year to 16.0% last month even though the average BAR segment rate remained stable at approximately £151.

Looking at the calendar year to date performance, April's positive trend was not strong enough to offset what happened in the first quarter of the year. The 4.9% decrease in GOPPAR for the calendar year was caused by a combination of both falling revenues and rising costs. Overhead cost increases in areas such as property and maintenance and a departmental operating profit conversion decrease of -0.7 percentage points impacted the bottom line with GOP as a proportion of total revenue at 1.4 percentage points below last year (42.0%).

Even though the first four months of the year show cumulative negative trends across all key performance indicators, the rolling twelve months figures are still recording benefit from the Olympic effect.

Spring fever in the provinces

The provinces experienced the biggest year-on-year profit increase in more than three years according to the latest HotStats survey. GOPPAR climbed 10.0% last month, which gives hoteliers reason to hope for a more profitable year ahead. This exceptional performance can partly be explained by the shift of the Easter holidays with Good Friday falling into March this year.

RevPar growth of 7.3% was facilitated by a combination of rising average room rate (+2.2%) and increased occupancy (+3.4 pts) in many provincial markets. Thanks to an overall positive non-rooms revenue trend, TrevPar rose by 2.2% to £87.30.

Birmingham was one of many markets with positive news in April: the city showed a 6.3% average rate increase and simultaneously saw occupancy climb by 4.8 percentage points resulting in RevPar up 14.4%. TrevPar was further boosted by 9.5% through increasing food (+10.2%) and beverage revenues (+9.5%). On the other hand meeting room hire slightly decreased by 1.5%.

Outstanding performance was recorded in Bristol: GOPPAR shot up by almost 55% last month thanks to above 20% revenue per available room increases across all departments.

The calendar year as well as the rolling twelve months picture of the provinces are, however, not in line with April performance; revenue increases not converted into profit growth despite efficient payroll control. In both cases TrevPar increased by 1.3% and by 1.4% respectively but upward pressure on costs still affected the GOP conversion.