UK hotels see profits drop

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Bristol has bucked profits trends

December marked the third consecutive month of year-on-year profit per available room decrease in the UK, as GOPPAR was down 0.9%.

Hotstats reported that there were nine months last year which reported year-on-year GOPPAR contraction.

Average rate was up 2.5% on the year in December, leading to a 0.1% year-on-year uptick in revpar despite the 1.7-percentage-point drop in occupancy. Ancillary revenue fell by 0.7% compared to December 2018, due to a 2.1% decline in F&B revenue per available room. Revpar recorded a 0.2% decrease.

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UK hoteliers were able to keep overheads under control in December, placing 4.5% below the same month of 2018. This reduction was led by a 2.5% year-on-year drop in utility expenses. However, the 3.8% increase in total labour costs on the back of shrinking revenue took a toll on profitability. Thus, GOPPAR for the 2019 financial year closed 0.8% below that of 2018.

Profit conversion in the UK was recorded at 38.4% of total revenue in December.  

In contrast, the city of Bristol marked its eighth consecutive month of profit per available room year-on-year growth in December, at 5.7%. This increase in profit was achieved despite a contraction in revenue.

A 3.2-percentage-point plunge in occupancy drove revpar down 1.4% year-on-year, despite a 3.5% year-on-year increase in average rate. A further 0.7% year-on-year drop in ancillary revenue resulted in a 1.1% fall in trevpar compared to December 2018.

Even though overheads increased by 2.6%, the ability of Bristol hoteliers to flex labour costs enhanced their profit in the context of diminished revenue. The contraction of both rooms labour costs (down 5.1%) and F&B labour costs (down 8.9%) placed December total payroll 1.3% below the same month of 2018. Consequently, goppar for the financial year 2019 was 3.4% higher than 2018.

Profit conversion in Bristol was recorded at 33.3% of total revenue in December.

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