Hotels in Scotland recorded a 15.8% year-on-year increase in GOPPAR this month, which helped the UK hotel market to maintain its upward trajectory in profit per room, according to the latest worldwide poll of full-service hotels from HotStats.

For hotels in the UK, profit per room in September increased by 2.7% year-on-year, which contributed to the 7.3% year-to-date GOPPAR increase and meant UK hoteliers remained on course for a fifth consecutive year of profit growth.

The growth in the bottom line has been successfully fuelled by consistent increases in top line performance, which included a 2.7% increase in RevPAR to £106.61 this month, as a 2.8% uplift in achieved average room rate, to £125.10, offset a 0.1 percentage point decline in room occupancy, to 85.2%.

Year-on-year growth in Rooms Revenue this month was supported by increases in Non-Rooms Departments, including Food and Beverage (+1.9%), Conference and Banqueting (+3.8%) and Leisure (+5.3%), on a per available room basis.

The growth in Other Revenue contributed to the 2.6% year-on-year increase in TrevPAR at UK hotels this month, to £160.09. And in spite of a 0.1 percentage point increase in payroll, to 24.6% of total revenue, hotels in the UK recorded a 2.7% increase in GOPPAR to £70.75 in September.

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

September 2017 v September 2016

RevPAR: +2.7% to £106.61

TrevPAR: +2.6% to £160.09

Payroll: + 0.1 pts to 24.6%

GOPPAR: +2.7% to £70.75

Hotels in Scotland made a significant contribution to the year-on-year growth in key performance indicators across the UK, which was led by a 12.6% increase in RevPAR to £100.03, thanks to a 2.0 percentage point increase in room occupancy, as well as a 10.1% increase in achieved average room rate, to £113.73.

The 15.8% increase in profit per room for hotels north of the border, to £63.96, was as a result of an 8.3% increase in TrevPAR to £155.11 and a 1.3 percentage point saving in payroll, to 26.0% of total revenue.

For hotels in Glasgow, top line performance was driven by a 2.8-percentage point increase in room occupancy, to a punchy 91.1%, as well as an 8.1% increase in achieved average room rate to £89.96.

Profit & Loss Key Performance Indicators – Glasgow (in GBP)

September 2017 v September 2016

RevPAR: +11.6% to £81.94

TrevPAR: +6.4% to £125.62

Payroll: - 0.1 pts to 26.7%

GOPPAR: +11.3% to £48.92

The 6.4% increase in TrevPAR, in addition to a 0.1 percentage point saving in payroll, to 26.7% of total revenue, helped Glasgow hotels record an 11.3% year-on-year increase in GOPPAR in September, to £48.92. This is equivalent to a profit conversion of 38.9% of total revenue.

"Edinburgh has undoubtedly been the star of the show in the Scottish hotel market in 2017. However, this month it was the turn of other cities to shine. In Glasgow, hotels have finally shaken off their post-Commonwealth Games hangover and are on course for a strong year of profit growth.

With the Hydro now in full swing, attracting major music artists, and the SECC continuing to compete effectively for major conferences, as well as Glasgow's strong profile as a destination for business and leisure visitors, the fundamentals of the hotel market suggests that the ground lost in 2015 and 2016 should be recovered," said Pablo Alonso, CEO of HotStats.

For hotels in Aberdeen, this month provided respite from the challenges the market has faced since the beginning of the oil crisis, as hotels in the UK's energy hub recorded a 79.1% year-on-year increase in profit per room to £31.23.

Somewhat ironically, the boost in performance this month was as a result of the oil and gas industry, as the Aberdeen Exhibition and Conference Centre welcomed 35,000 delegates to the SPE Offshore Conference, which fuelled a 23.8% increase in RevPAR, to £59.50, which was primarily due to an 18.5% increase in achieved average room rate to £80.12.

Profit & Loss Key Performance Indicators – Aberdeen (in GBP)

September 2017 v September 2016

RevPAR: +23.8% to £59.50

TrevPAR: +21.2% to £81.85

Payroll: +4.5 pts to 27.2%

GOPPAR: +79.1% to £31.23

Growth in Non-Rooms Revenues contributed to the 21.2% increase in TrevPAR, to £81.85, and with hotels in Aberdeen operating at a low cost base as a necessary response to the top line decline in the market in recent years, GOPPAR levels for September soared.

The addition of 328 bedrooms into the Aberdeen market so far in 2017, all of which are operating under the Hampton by Hilton brand, means the market remains challenged and the growth in September will not outweigh the -17.7% drop in profit already suffered in the eight months to August 2017.

However, it is a marked improvement on the consecutive years of decline in profit per room in 2015 (-36.2%) and 2016 (-54.8%),

"Whilst the pace of profit decline has slowed in 2017, the reprieve for Aberdeen hotels this month is likely to be short lived. And with no obvious signs of a recovery in oil prices and a further 344 bedrooms due to enter the market in the next 12 months, including the 126-bedroom Marriott Residence Inn and the 218-bedroom Sandman Signature, the situation could remain difficult.

For owners and operators of hotels in Aberdeen, up until now cost cutting measures to minimise losses have been vital to maintain profit levels. But unless the situation improves, further cuts will be untenable and astute hotel management will be essential for survival," added Pablo.

About HotStats

HotStats is a global data benchmarking company offering specialized performance analysis and a benchmarking tool that helps analyze financial and operational data from a diverse range of hotels globally. This provides hotel owners, operators, and investors with valuable insights into the financial performance of their properties against their competition – an invaluable resource for weighing options and evaluating investment opportunities. For a quick demo, email us at [email protected] or visit www.hotstats.com.

David Stephens
Operations Manager - HOTSTATS
HotStats Limited