Ground-breaking research from TRI Hospitality Consulting’s unique HotStats database suggests that hotels across much of the UK are still reeling from the sucker punch which was dealt to them at the onset of the current economic downturn in 2008.

As other advisors rely on Revenue per Available Room (RevPAR) performance to guide their mainly positive sentiment of the UK hotel industry, it is clear that this dated measure is misleading in the current operating environment as the profit per room of many hotels across the UK continues to decline.

It is time for the industry to evolve to integrate measures such as Total Revenue per Room (TrevPAR) and GOPPAR (Gross Operating Profit per Room) into their performance analysis.

This unique report highlights that whilst the London hotel market was having a record-breaking year in 2011, the Provincial hotel market was falling further behind pre-recession performance levels.

Since late 2009, hoteliers in London have been rolling with the punches and recording consistent year-on-year growth in profit, but it is by no means a universal success story with as many as 33% of hotels in the capital recording a decline in profit in 2011.

In the Provinces hotels are fighting back by driving demand through price reductions and third party websites, but for every one step forward that Provincial hoteliers are able to make, inflation rates, utility costs and payroll obligations are forcing them to take two steps back. But there are pockets of good news in markets and properties which have fought back against the barrage of blows.

As well as identifying the primary cause of the decline in profitability, this report will highlight the major trends in the UK hotel market, which have, and will continue to, challenge the bottom line performance of hotels. This insight includes:

  • In the Provincial UK, whilst overall RevPAR is now approximately 3% above 2002 levels at £48.26 in 2011; GOPPAR has dropped to £25.16 in 2011 from £37.11 in 2002;
  • Although RevPAR in London has grown by approximately 50% since 2002, which has contributed to a 36% increase in profit per room, the gap between these two measures in London has grown by 84% in the last ten years;
  • Outside of London GOPPAR growth was achieved in a number of cities including Cambridge, Oxford, Edinburgh, Aberdeen, Brighton and Manchester;
  • As hoteliers fight tooth and nail for business, one of the most useful measures to come to the fore is achieved Net ARR, a bare bones assessment of how much hoteliers are getting for their room after deductions for bedroom expenses and travel agent’s commissions; and
  • hotels in the UK may never be as profitable as they were prior to the economic downturn.
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