HotStats UK Chain Hotels Market Review – September 2016

South East Hotels on Course for Another Bumper Year of Profit Growth
Further to strong profit growth in both 2014 (+10.0%) and 2015 (+8.4%), year-to-date performance suggests hoteliers in the South East are on course for another bumper year of profit growth in 2016, according to the latest data from HotStats.

Despite year-on-year growth in GOPPAR (Gross Operating Profit per Available Room) slowing to +1.1% in September, South East hoteliers have recorded a 5.5% increase for Q3 2016, to £48.85, equivalent to a conversion of 39.1% of total revenue.

Astute cost management has driven growth in profit per room at hotels in the South East this year as much as top line increases, with the 5.5% year-to-date GOPPAR increase being achieved on the back of a year-on-year TRevPAR (Total Revenue per Available Room) increase of just 2.8%.

Despite a 1.7% increase in payroll on a per available room basis, to £33.13 from £32.57, savings in overheads of 1.2% on a per available room basis have helped to maintain the growth in profit per room.

Leeds Hoteliers Lamenting Rugby World Cup But YTD Performance Remains Strong
Despite suffering a 5.5% decline in profit per room this month, 2016 remains a positive year of performance so far for hotels in Leeds having recorded GOPPAR growth of +4.8% in the nine months to September.

It was always going to be challenging to match the performance of September 2015, when hotels in Leeds achieved record RevPAR (Revenue per Available Room) levels as the city hosted two games in the Rugby World Cup, as well as being the base of a number of teams.

Further to a 2.2% decline in RevPAR, top line performance in the city remained strong at an occupancy of 84.7% and an achieved room rate of £79.51, supported by demand from the commercial segment, which comprised 40.4% of total roomnights sold this month.

Growth in ancillary spend including Food and Beverage (+4.6%) and Conference and Banqueting (+11.9%) helped to reduced the impact of the RevPAR decline, and TrevPAR remained stable at approximately £121.27 for the month.

Cost increases in payroll (+7.4%) and overheads (+0.9%) on a per available room basis, contributed to the 5.5% decline in profit per room for the month, to £43.75.

Manchester Hotels on High as RevPAR Hits Post-Recession Peak
Hotels in Manchester recorded a post-recession RevPAR high of £86.93 this month, contributing to a 6.0% year-to-date increase for 2016.

The 8.8% year-on-year increase in RevPAR was led by an 8.2% increase in achieved average room rate, to £100.55, as well a 0.5 percentage point increase in occupancy, to 86.5%.

In particular, the strength of demand in the commercial sector in the city enabled Manchester hoteliers to drive the rate achieved in both the corporate (+8.1%) and residential conference (+13.3%) segments.

In addition to record RevPAR levels, for the most part, the 5.8% growth in TrevPAR at hotels in Manchester successfully flowed through to the bottom line.

Despite a 20.7% increase in Rooms Cost of Sales, to £8.81 per available room from £7.30 during the same period in 2015 and a 3.3% increase in labour costs, to £31.24 from £30.25 in 2015, profit per room at Manchester hotels increased by a buoyant 5.2% year-on-year to £53.53. This is equivalent to a profit conversion of 41.3% of total revenue.