A Capital Come-Back For June, As London Hotels Outperform

In London, a 2.0% year-on-year reduction in room rate to £143.79, compared with £146.75 in June 2012, was more than offset by a 6.3% increase in occupancy from 82.6% to 87.9%. The result was a 4.2% rise in rooms yield from £121.33 to £126.36.

In the regions, room rate remained unchanged at £62.77 while occupancy improved by 2.4% from 74.9% to 76.8%. Rooms yield consequently rose by 2.4% to £48.21, compared with £47.07 12 months ago.

However, regional hotels posted the strongest performance for the first six months of the year as whole: comparing January – June 2013 with the same period last year, rooms yield increased by 2.0% in the regions but fell by 2.7% in the capital.

Robert Barnard, partner at BDO LLP, commented: “This is a strong performance all around, especially in London. Operators are skilfully using selective price discounting to contribute to top line growth at a time when the operating environment is beginning to show signs of improvement.

“Regional hotels will be particularly pleased with their results for the first half of the year. A combination of strong management and lack of new hotel openings has enabled operators in the regions to buck the trend we’ve seen in recent years and outperform their London counterparts. To have achieved this at a time when the MICE (meetings, incentives, conferences and exhibitions) market remains in the doldrums is all the more impressive.

“We expect regional hotels to remain in the black for the rest of the year provided that consumer and business confidence continues its upward trajectory. London’s performance may suffer from unfavourable comparisons with last year’s Olympics-inspired success, but the city’s fundamentals are likely to remain sound for the remainder of 2013.”

Preliminary data for June 2013

BDO’s hotel trends surveys feature a broad range of hotels across the country although mainly in the 3 – 4 star categories and featuring rather more chain operated hotels than those operated independently. While there are a fair number of hotels in country and rural areas, there is a predominance of hotels in towns and cities. In London, supply featured is mainly in the 3 –5 star categories. The definitions of the key terms used in the surveys are as follows:

• Room occupancy: the ratio of total occupied rooms to total available rooms
• Average achieved room rate (AARR): rooms revenue divided by the total number of guest rooms occupied during the year
• Rooms yield: room occupancy multiplied by the average achieved room rate (also known as RevPar).

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