HotStats UK Chain Hotels Market Review – June 2013
In June, hoteliers in London grew TrevPar by 10.9% year-on-year, bouncing back from revenue and profit declines in the same month last year, according to the latest HotStats survey of approximately 625 full-service hotels across the UK. Pre-Olympic effects, the Queen’s Diamond Jubilee and governmental warnings around transport led to a decline in total revenues per available room (TrevPar) of 5% in June 2012.
June is Busting Out All Over for London’s Hotels
In June, hoteliers in London grew TrevPar by 10.9% year-on-year, bouncing back from revenue and profit declines in the same month last year, according to the latest HotStats survey of approximately 625 full-service hotels across the UK. Pre-Olympic effects, the Queen’s Diamond Jubilee and governmental warnings around transport led to a decline in total revenues per available room (TrevPar) of 5% in June 2012.
With occupancy growing back to the level of June 2011 at 88.9% and average room rate (ARR) increasing by 3.9% year-on-year to £163.29, the increase in revenue per available room (RevPar) was 12.3% equalling £15.89. Additional revenue per available room of £3.27 derived from food (+7.5%) and beverage (+9.6%) sales and meeting room rental (+15.0%) led to a total revenue growth of £19.16 per available room. June 2013’s performance boosted the calendar year to date TrevPar up from £147.51 in May to £155.67 in June.
Thanks to a rooms departmental operating profit conversion rate of 80.9% on average in London’s full service hotels, hoteliers in this month’s performance review were able to make the most of their rooms revenue growth leading to an increase of 6% in rooms department profit per room let. The major drivers of this profitability boost were lower payroll levels than last year and a decline in travel agent commission paid.
Food & beverage departments in London’s full-service hotels also experienced double digit profit growth: F&B departmental operating profit rose by 18.8% per available room to £15.80 which is 30% above the calendar year’s average. The combination of June’s surge in total revenue and enhanced profitability in hotels in London secured a third consecutive month of profit growth with GOPPAR rising by 12.5% in June compared to last year and 2% compared to June 2011.
Positive second quarter thanks to a third consecutive month of profit growth for the Provinces
Gross operating profit per available room (GOPPAR) in provincial hotels rose by 9.4% in June and 3.6% for the calendar year to date, according to the latest HotStats survey of approximately 625 full-service hotels across the UK. As is the case in London, the positive year-on-year performance in the provinces this month was partly a result of weak performance in June last year.
For the calendar year, occupancy increased by 1.5 percentage points to 68.6% while ARR for the first half of the year increased by 1.7% to £69.42. Consequently RevPar in provincial hotels rose by 3.9% compared to the first half of 2012. Growth in food (+2.3%) and beverage revenues (+1.3%) as well as leisure revenues (+4.2%) helped to increase total revenues per available room by 3.1%. Despite higher utility costs and increases in overhead costs in all areas - from administration & general to property & maintenance – the improvements made in payroll efficiency this year secured a profit gain per room of £0.78 equalling 3.6%.
Coventry, as one of the Olympic host cities, experienced a pre-Olympic drop in TrevPar of 12.9% last year in the month before the games. As the segment mix changed this year and demand from the corporate and residential conference sectors rebounded, hoteliers in the city experienced RevPar gains driven by a growth in Best Available Rate combined with a surge in non-rooms revenues thanks to a rise in conference room hire (+15.9%) and food revenues in restaurants (+136%). In conjunction with astute cost management, revenue growth in Coventry boosted the bottom line and allowed for profit growth of 37.9%.
Birmingham as one of the cities who missed out on hosting Olympic events seemed to be equally hit by a pre-Olympic effect last year when GOPPAR dropped by 27.3% in June. This year, however, hoteliers in Britain’s second city saw profits per available room climb by 38.4% to £37.61 thanks to a rise in TrevPar of 26.2% that more than overcompensated for rising overhead costs.
The UK Chain Hotels sample is composed of 624 hotels with an average hotel size of 177 bedrooms.
The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate primarily in the three and four-star sectors.
Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.
Average Room Rate (ARR) is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Room RevPar (RevPAR) is the total bedroom revenue for the period divided by the total available rooms during the period.
Total RevPar (TrevPAR) is the combined total of all revenues divided by the total available rooms during the period.
Payroll % is the payroll for all hotels in the sample as a percentage of total revenue.
GOPPAR is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
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