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London hoteliers hit new highs, beating pre-recession performance

27/07/2011

London hoteliers appeared to be basking in an economic microclimate today after reporting another month of profit growth, while major cities elsewhere in the UK continue to suffer.


Hoteliers in the capital saw Gross Operating Profit per Available Room (GOPPAR) rise 17.5 per cent to £94 in June, according to the latest HotStats survey by TRI Hospitality Consulting. It was the 19th month of year-on-year growth for London hotels. The increase was driven by a 15 per cent hike in Revenue per Available Room (RevPAR) to £132. This represented the highest margin of GOPPAR growth in the capital since September 2010.


In the first six months of 2009 hotels in London suffered a year-on-year decline in profit per room of 14 per cent. However, 12 per cent growth in the first half of 2010 on top of the year-to-date growth of 10 per cent in 2011 leaves London hoteliers well ahead of pre-recession performance levels. 


Jonathan Langston, managing director of TRI Hospitality Consulting, said: "London hoteliers seem to be infallible at the moment. They have shrugged off the recession to hit new heights.”


Lower staffing costs also help profitability. The revenue growth was primarily driven by a 12.5 per cent increase in average room rate to £147 from £131 and whilst pressure remains on price in the commercial sector across the majority of the UK, hotels in the capital recorded significant levels of growth in both the corporate (+11 per cent) and conference (25.5 per cent) segments.


Outside London the UK hotel market achieved an increase in profitability levels of 5.3 per cent in June, but the overall growth belies the pain which some cities continue to suffer.


The overall performance for provincial hoteliers in June was strong, with a 3.5 per cent year-on-year increase in Total Revenue per Available Room (TrevPAR) levels to £101, boosted by a 5.5 per cent increase in RevPAR and a three per cent increase in food and beverage revenue.


This is the first month in which the regional hotel market has recorded an increase in profitability levels since January this year and the 5.3 per cent year-on-year growth in GOPPAR to £35 was in spite of a continued decline in both room hire revenue per available room (-4.5 per cent) and leisure club revenue per available room (-2.3 per cent).


The growth in profitability in the provinces was mainly driven by an increase in RevPAR, but the picture across the UK was mixed.  Bristol (+10.3 per cent), Edinburgh (+13.2 per cent) and Manchester (+29.9 per cent) enjoyed significant growth, but Glasgow (-11.7 per cent), Liverpool (-10 per cent) and Cambridge (-5.4 per cent) all finished in negative territory.


The UK Chain Hotels sample is composed of 551 hotels with an average hotel size of 182 bedrooms.


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