Rising costs, including high-commission third party bookings, are hurting the provincial hotel market, which saw profitability levels decline by 7.9 per cent in October.

The latest HotStats survey of approximately 550 full-service hotels across the UK by TRI Hospitality Consulting showed whilst room revenue levels for October remained broadly similar to the same period in 2010 at £51.10, provincial hoteliers suffered declines in food and beverage (-4.1 per cent), leisure (-2.1 per cent) and meeting room hire (-7.3 per cent) revenue per available room.

The survey revealed an increasing proportion of high-commission third party bookings as year-on-year travel agency commission levels per available room increased by 16.7 per cent to £3.27 per room sold from £2.80 per room sold during the same period in 2010. This is equivalent to a net cost of 6.4 per cent of rooms revenue for the month of October.

Jonathan Langston, managing director of TRI Hospitality Consulting, said: “Despite general managers in the UK remaining torn as to whether the high cost of third party websites is offset by the elevated profile which is achieved through their use, it is clear that provincial hoteliers are more reliant than ever before on this booking channel and this is only set to increase in future.”

Further cost increases this month were suffered in property and maintenance expenses, up 3.8 per cent, utility costs, which increased by 7.7 per cent to £4.20 from £3.90 per available room during the same period in 2010 and payroll, which increased by 0.9 percentage points to 31.4 per cent of total revenue. 

“And with the Bank of England reporting a risk of stagnation until the middle of 2012, provincial hoteliers will continue to face challenging trading conditions,” added Langston.

Meanwhile, London hoteliers saw their successful 2011 start to slide last month, as occupancy levels dropped by 2.4 per cent year-on-year and Revenue per Available Room (RevPAR) declined by 0.7 per cent. London endured a 7.9 per cent drop in food and beverage revenue to £30.23 per available room and a 4.6 per cent decline in meeting room hire revenue to £7.64 per available room. London hotels also saw a softening in both the achieved rate in the corporate (-0.9 per cent) and leisure (-0.3 per cent) sectors in October.