UK regions see ups and downs in hotel profits

(The property in the UK completed its £11M refurbishment.)

According to HotStats' latest data, hotels in three different regions of the UK are seeing some notable shifts in profit—with one region adapting to an alternate source of income.

Glasgow hotels quickly bounce back

After a two-year profit decline in 2015 and 2016, Glasgow hotels are slowly rebounding toward the premium performance achieved in 2014 when the city hosted the Commonwealth Games. The hotels recorded strong profit growth in January and February of this year.

The decline was due to Glasgow's struggles to absorb the 880 guestrooms that have entered the market since 2014. At the same time, the 73 percent boost in the budget segment caused significant downward pressure on rate.

Despite a 4.7-percent increase in both payroll and a 3.8-percent increase in overheads, a 6.2-percent increase in profit per room was recorded at Glasgow hotels for year-to-date 2017 to $26.18.

Profit continues to drop at Heathrow hotels despite record airport passenger numbers

Heathrow Airport had its best-ever February, with a 5.5-percent increase in passenger numbers. However, profit per room at nearby hotels declined by 4.3 percent due to falling RevPAR and rising costs.

Although Heathrow Airport accommodated a record 5.27 million passengers in February, nearby hotels saw a 1.7-percent decline in room occupancy.

While the individual leisure and group leisure, conference and banqueting sectors also saw significant decreases, hotels at Heathrow recorded a 0.3-percent increase in total revenue this month. This was primarily due to the 2.1-percent year-on-year increase in food and beverage revenue.

Despite this revenue increase, a 5.5-percent year-on-year increase in payroll wiped food and beverage payroll out completely. Therefore, profit levels at hotels at Heathrow Airports fell by 4.3 percent this month.

West Midlands sees boost in non-rooms rev

Despite record low periods in occupancy, the West Midlands achieved increasing growth in profit per room and in hotel occupancy beyond previous levels. However, this was no easy task, as this achievement was at the expense of a 10.4-percent increase in rooms costs of sales to $7.58, or 10.5 percent of rooms revenue.

Much of this increase in rooms revenue in West Midlands hotels this month was supplemented by growth in non-rooms revenue, including food and beverage, conference and banqueting and leisure, which contributed to the 3.3 percent in TrevPAR and a 4.8-percent year-on-year increase in gross operating profit per room.