‘Rough start’ for UK hotels

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Uncertainty and increased supply have hit performance

UK hotels were described as having got off to “a rough 2020 start”, registering a year-on-year drop in profit.

Goppar decreased 2.4% year-on-year in January, as hoteliers in the UK were unable to dispel the profit-per-room contraction trend that dominated most of 2019.

Hotstats commented: “The ‘wait and see’ attitude in travellers from Mainland Europe, coupled with the increased competition brought about by the expansion of the hotel room supply in the market, are two of the main factors behind these results.”

Occupancy in January was flat on the year at 64.8%. Average room rate recorded a 1.5% uptick that drove the 1.4% year-on-year climb in revpar. Non-rooms revenue per available room was also slightly up, by 0.5%, mainly due to a 0.3% year-on-year increment in the F&B department. In all, trevpar recorded a 1.1% increase compared to January 2019.

Labour costs exhibited a higher growth rate than revenue, thus eroding flow through. Led by payroll increases in Rooms (up 3.6% year on year) and F&B (up 3.8% year on year), total labour costs expanded by 2.7%. Overheads recorded a more moderate increase, by 0.8%, including a 4.5% decrease in utility expenses. As a result, profit conversion in the UK was recorded at 24.1% of total revenue, a 0.8-percentage-point drop from the previous year.