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Food price inflation bites profit rates at regional hotels

27/04/2012

Rising costs led to a seven per cent year-on-year decline in profit per room for hotels in the UK provinces during the first quarter of 2012, according to the latest HotStats survey by TRI Hospitality Consulting.

The survey of approximately 560 full-service hotels across the UK found that the year got off to a tough start, with a 14.3 per cent decline in profit per room in January, a 10.2 per cent decrease in February, and a 1.8 per cent decline in March.

Rising costs, including food and beverage, were to blame said Jonathan Langston, managing director at TRI Hospitality Consulting: “During a period when hoteliers are finding it increasingly difficult to pass on any increases in costs to the consumer, the latest figures from the British Retail Consortium show that the rate of food price inflation in the UK climbed to 5.4 per cent in the year to March, up from 4.2 per cent in the year to February.

“This has undoubtedly impacted the ability of hoteliers to convert a strong increase in food and beverage revenue to an increase in profit in this department.”

Langston added that, while good news has been hard to find in the provincial hotel market during the first quarter of the year, the markets which had recorded positive profit results on a per available room basis included Cambridge (+0.7 per cent), Reading (+6.5 per cent) and Chester (+29.5 per cent).

In London, however, it was a different story, with hotels recording a near faultless performance across all headline performance measures in the first quarter. Hotels in the capital achieved a 3.1 per cent increase in profit per room and a 2.6 per cent increase in achieved average room rate to £124.14, suggesting they are shaping up for a successful Olympic year.


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