HotStats UK Chain Hotels Market Review – July 2016

Profit Growth Continues Apace at Eastern Region Hotels
Year-on-year profit per room at Eastern region hotels increased by 5.5% this month, contributing to the 3.3% increase for year-to-date 2016 and the increase of more than 45.0% in this measure over the last three years, according to the latest data from HotStats.

The East has been one of the top performing post-recession regions, with RevPAR (Revenue per Available Room), increasing by 23.0% over the last three years on a rolling 12-month basis, to £56.69.

The RevPAR increase has far outpaced the growth in ancillary departments during the same period and the Rooms department now accounts for 54.1% of total revenue, against 49.8% of revenue in the 12 months to August 2013.

As a result of the increased contribution to total revenue from the highly profitable Rooms department, as well as astute cost management, hotels in the Eastern region are now more efficient than ever, with a profit conversion of 30.5% of total revenue recorded in the 12 months to July 2016, compared to 23.8% in the 12 months to August 2013.

London Hotels Record Largest Profit Increase of The Year
Hotels in London recorded a 9.0% increase in profit per room in July, which is the largest year-on-year margin of growth in this measure in 2016 and only the third month in which a profit increase has been achieved in a challenging year for hotels in the capital.

For hotels in London, July was a perfect storm of the biennial Farnborough Air Show, which typically drives strong demand for hotel accommodation in the capital, visitor demand being displaced to London from other key European destinations due to security threats and Brexit, which caused a crash in the value of Sterling, suddenly making the UK a much cheaper place to visit.

The associated volume of demand enabled hotels in the capital to successfully leverage achieved average room rate and drive a 7.4% increase in RevPAR to £148.62, the highest RevPAR of the year so far.

In addition to the growth in RevPAR, revenue increases were achieved in ancillary departments, including Food and Beverage (+4.0%) and Conference and Banqueting (+6.8%), which contributed to a 5.8% TrevPAR (Total Revenue per Available Room) increase to £194.30.

Despite the strong increase this month, at £70.38 year-to-date 2016 GOPPAR (Gross Operating Profit per Available Room) remains 3.3% behind the same period in 2015.

Nottingham Hotels Enjoying Bumper Summer of Profit Growth
Hotels in Nottingham have recorded a 15.5% year-on-year profit per room increase in July, which is further to the 10.4% increase in June and underscores the summer of 2016 as a highly successful period of trading for hotels in the East Midlands city.

In addition to the typical uplift in demand from the leisure segment, the strong performance in July was supported by a number of conferences in the city, which included the Health Services Research UK Symposium and the British Society of Criminology Conference, together attracting more than 700 delegates.

The strength of demand enabled Nottingham hoteliers to leverage price, the outcome of which was evident in the 7.7% increase in achieved average room rate for the month to £64.69, which was led by the 9.4% increase in the Best Available Rate segment, to £73.09.

The growth in Rooms revenue was sufficient to fuel a 6.5% increase in TrevPAR as year-on-year declines were recorded in ancillary departments. Despite a slight increase in both payroll (+0.2%) and overheads (+1.8%) on a per available room basis, profit conversion at Nottingham hotels in July was up by 2.6 percentage points year-on-year, to 32.8% of total revenue.

Media Contact

Sita Banigo

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