UK hotels record negative performance in May

Innside Manchester, UK. Photo credit: Meliá Hotels International

Profit per room at UK hotels dropped 4.3 percent to £55.48 in May as all departments saw year-on-year declines, according to data from HotStats. Meanwhile, owners and operators continue to face rising costs.

These hotels saw a 1.3-percent decline in total revenue £142.82 at hotels in the UK this month. The levels decreased in response to falling revenues in non-rooms departments, including food & beverage (-2.0 percent), conference & banqueting (-3.5 percent) and leisure (-1.7 percent) on a per available room basis along with a drop in rooms revenue (-1.2 percent)

The 1.2-percent decline in RevPAR to £93.30 this month was a result of a 0.2-percent YOY drop in room occupancy to 80.5 percent. UK hotels also saw a 0.9-percent decline in achieved average room rate to £115.90. This is the second recorded rate decrease since October 2016. The first drop was during the debilitating weather conditions in March 2018.

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Although the commercial sector remained strong in May 2018, declines in achieved average room rate were recorded in the individual leisure (-2.9 percent) and group leisure (-4.8 percent) segments. These fell despite the surge in leisure-related demand during the two bank holiday weekends and several internationally significant events, including the Royal Wedding.

Rising costs also attributed to falling revenue, including a 0.7-percent increase in payroll to 27.7 percent of total revenue. A 0.3-percent increase in overheads, which grew to 21.4 percent of total revenue, also contributed to the price hikes.

The falling revenue levels and rising costs caused GOPPAR to drop 4.0 percent at UK hotels for year-to-date 2018. “As this is only the second time there has been a decline in TrevPAR in the last 20 months, it is probably more of a blip in performance than a sea of change. However, with an additional six days of school holidays due to the two Bank Holiday weekends and May half-term, the UK hotel market was undoubtedly more reliant on the leisure sector this month, which has not performed. While both London Heathrow and London Gatwick airports reported handling record passenger numbers in May, it is possible that the poor weather earlier in the year led to there being a higher number of departures than arrivals,” Pablo Alonso, CEO of HotStats, said in a statement.

Leeds

Hotels in Leeds, compared to the overall performance across the UK, recorded one of their strongest months of YOY growth in recent years in May during the final stage of the Tour de Yorkshire.

The increase in demand drove room occupancy at hotels in Leeds to increase 6.5 percent YOY to 79.1 percent. Hotels in the city also saw a 1.5-percent increase in achieved average room rate to £80.59.

Growth in both volume and price pushed RevPAR to rise 10.6 percent to £63.74. This was a substantial increase in the Leeds market during the five months to May 2018 and well above the year-to-date average of £56.32. “The Tour de Yorkshire is a spin off event which was created after the region successfully hosted the Grand Depart for the 2014 Tour de France. The number of spectators to the event now exceeds more than two million people which not only positively impacts the local economy, but is a coup for hoteliers on the route,” Alonso said.

Hotels in Leeds were also able to drive an increase in non-rooms revenue in May, including a YOY increase in food and beverage revenue (+10.1 percent) and conference and banqueting revenue (+13.9 percent) on a per available room basis. TrevPAR at hotels in Leeds increased 9.8 percent YOY to £109.08, in response.

Leeds’ hotels also recorded a 2.8-percent saving in payroll, which fell to 29.8 percent of total revenue. The movement in revenue and costs allowed profit per room at hotels in Leeds to grow 21.4 percent to £36.62.

Manchester

Hotel performance in Manchester decreased a year after the Manchester bombing. The fall in demand from the commercial segment in May caused declines in both room occupancy (-2.8 percent) and achieved average room rate (-1.4 percent). Manchester’s hotels still recorded this peak in performance for year-to-date 2018, despite RevPAR dropping 4.6 percent to £80.71. Further declines in non-rooms revenues caused TrevPAR at hotels in Manchester to fall 5.2 percent in May to £124.41.

Rising costs, including a 1.4-percent increase in payroll to 26.5 percent, along with the declines in revenue pushed Manchester’s hotels to record a 12.7-percent drop in profit per room to £44.56. This decrease contributed to the 2.0-percent fall in GOPPAR for year-to-date 2018.

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