October was a banner month for hotels in the UK, as strong growth was recorded across all revenue-generating departments and driven by a range of demand sources. This mix helped push hotels to a 9-percent year-on-year increase in profit per room for the month, according to the latest data tracking full-service hotels from HotStats.

Growth in revenue was led by an 8.3-percent year-on-year increase in RevPAR to 102.67, which was fuelled by a 2.3-percentage-point increase in room occupancy to 83.5 percent and a 5.3-percent increase in average room rate to 122.92.

In addition to the growth in rooms revenue, hotels in the UK successfully recorded year-on-year increases in non-rooms revenues, including Food & Beverage (up 4.3 percent) and Conference & Banqueting (up 5.7 percent), on a per-available-room basis.

The growth across all departments contributed to the 6.6-percent year-on-year increase in TRevPAR for the month to 156.36. Whilst this was behind the 2018 peak of 162.59, recorded in July, it remained 10.4-percent above the year-to-date figure at 141.58.

The robust top-line performance in October was led by demand from the commercial sector, which accounted for almost 40 percent of all accommodated roomnights, said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats. Demand levels were also supported by the ongoing political party conference season and leisure demand from school half-term holidays. And despite Storm Callum bringing severe flooding to parts of the UK, it was a relatively settled picture, which even included a royal wedding.

Profit & Loss Key Performance Indicators Total UK (in GBP)

October 2018 v. October 2017

  • RevPAR: +8.3% to 102.67
  • TRevPAR: +6.6% to 156.36
  • Payroll: -0.8 pts. to 25.9%
  • GOPPAR: +9.0% to 64.44

Cost savings also abetted the jump in GOPPAR. This included a 0.8-percentage-point drop in payroll, to 25.9 percent of total revenue, and a 0.2-percentage-point saving in overheads, to 20.6 percent of total revenue.

Octobers strong growth helped push profit performance for the year back into positive territory, with year-to-date GOPPAR growth of 1 percent to 54.05.

The positive performance could have been even stronger had it not been for some challenges, including in Undistributed Operating Expenses, with year-on-year increases recorded in Administrative & General (up 3.3 percent) and Sales and Marketing (up 3.4 percent), on a per-available-room basis.

While the broader UK performed well, hotels in Newcastle continue to struggle, hurt by escalating costs. These included a 1.0-percentage-point increase in payroll, to 30.7 percent of total revenue, and a 1.4-percentage-point increase in overheads, to 26.7 percent of total revenue.

RevPAR in the city only grew 0.5 percent and was led by a 2.2-percentage-point year-on-year increase in occupancy to 77.1 percent. Conversely, average room rate dropped by 2.3 percent to 74.56.

Furthermore, the slim 0.1-percent increase in TRevPAR, to 91.41, was only due to growth in rooms revenue, which was sufficient to offset the decline recorded across non-rooms departments, including a 1.6-percent decline in food & beverage revenue, to 29.74 per available room.

Profit & Loss Key Performance Indicators Newcastle (in GBP)

October 2018 v. October 2017

  • RevPAR: +0.5% to 57.49
  • TrevPAR: +0.1% to 91.41
  • Payroll: +1.0 pts. to 30.7%
  • GOPPAR: -10.4% to 25.40

As a result of the movement in revenue and costs, profit per room at hotels in Newcastle dropped by 10.4 percent in October to 25.40, which is equivalent to a profit conversion of just 27.8 percent.

A closer look at the data suggest that the issue for Newcastle hotels is more long term, illustrated by the ongoing decline in profit per room, which has fallen to 24.37 in the 12 months to October 2018 and is almost 5 lower than the 29.03 GOPPAR recorded during the same period in 2014-15.

In short, hotels in Newcastle are suffering due to an untimely softening in demand, which has been further exacerbated by increasing costs, said Grove. This might well be a warning sign for hotel owners and operators in other provincial markets that it is becoming harder to convert revenue into profits.

At the other end of the spectrum, Birmingham hotels were amongst the best performing in October as they welcomed a number of conferences, including the 2018 Conservative Party Conference, which attracted more than 11,000 delegates.

As a result, hotels in Britains second city were able to record an 8.5-percent year-on-year increase in profit per room, which grew to a 2018 high of 55.37, more than 46 percent above the year-to-date figure of 37.91.

Growth was primarily due to a 4.2-percent increase in RevPAR, which was fuelled by a 5.6-percent increase in average room rate to 97.52, a number that was only slightly below the annual high recorded in Birmingham, in September, of 97.64.

In addition to the increase in rooms revenue, growth was recorded across all non-rooms departments and, as a result, TRevPAR for hotels in Birmingham increased by 7.4 percent year-on-year to 119.02.

Profit & Loss Key Performance Indicators Birmingham (in GBP)

October 2018 v. October 2017

  • RevPAR: +4.2% to 78.54
  • TRevPAR: +7.4% to 119.02
  • Payroll: -0.7 pts. to 22.1%
  • GOPPAR: +8.5% to 55.37

About HotStats

HotStats provides monthly P&L benchmarking and market insight for the global hotel industry, collecting monthly detailed financial data from more than 8,500 hotels worldwide and over 100 different brands and independent hotels. HotStats provides more than 550 different KPIs covering all operating revenues, payroll, expenses, cost of sales and departmental and total hotel profitability.

Leah Hewlett
Sales & Account Coordinator
HotStats Limited