|London hotels avoid post-Olympic slump with strong room occupancy|
Monday, 29th October 2012
Source : TRI Hospitality Consulting
London hoteliers dispelled any rumours of a post-Olympic depression as occupancy levels rose by 3.1 percentage points to 89.4% in the months of September according to the latest HotStats survey.
Despite a year-on-year decline of 3.2% in average room rate from £141.82 to £137.26, the increase in occupancy levels
resulted in a 0.6% increase in Revenue Per Available Room (RevPAR) for the month. During the same period, Total Revenue per Available Room (TrevPAR) increased by 1.3%, underpinned by a strong increase in non-rooms departmental
revenue of approximately 19%.
“Whilst there were rumours of a potential post-Olympic slump as experienced in previous host cities, which appeared even more plausible if you take the challenging economic environment into account, London hoteliers have responded with the strongest September occupancy performance recorded since HotStats began capturing data for the London full-service hotel market,” said Jonathan Langston, managing director at TRI.
The strong performance can, in part, be attributed to London hosting the most successful Paralympic games in history, drawing record breaking crowds to stadia and event venues; but the capital also witnessed a late increase in visitors as
data from our unique HotStats benchmarking service reveals that the increase in occupancy levels was underpinned by a 22% increase in leisure-related demand, whilst corporaterelated demand has remained softer year-on-year.
As a result of the robust growth in non-rooms revenue for London full-service hotels, Gross Operating Profit per Available Room (GOPPAR) for the month increased by 0.8% to £86.41. The growth in profit levels were softened by rising costs, in particular travel agent commissions (4.5%) and utilities (8.1%).
Post-Olympic depression dispatched by London hotels “As always, London continues to exceed expectations. Whether it be in putting on potentially the greatest Olympic and Paralympic games ever or bucking the historic trend of a post-Olympic slump, London hoteliers have benefited directly from a strong summer of events.
Despite the initial slump in headline performance figures during June and July, the strong start to the year in addition to the performance in August and September has almost guaranteed that year-onyear performance for London hotels in 2012 will be up on 2011, as profit levels have already increased by 6.6% in the calendar year” said Langston.As a result of the flat RevPAR performance in the month of September, the UK Provincial hotel market GOPPAR performance declined by 1.6%, already making the gains experienced in August a distant memory according to the latest HotStats survey.
Back to the old routine for Provincial hoteliers
Occupancy levels during the month of September increased by 2.5 percentage points from 77% to 79.5%, primarily underpinned by an increase in leisure-related demand (+16%). However, any anticipated increases in RevPAR were short lived as the growth in volume was cancelled out by a by 3.1% drop in achieved average room rate to £72.16.
Despite the flat RevPAR performance, as a result of the increase in volume non-rooms revenue at Provincial hotels experienced a 0.7% increase and ensured that TrevPAR growth remained positive at +0.3%.
Despite the UK inflation rate being at its lowest in nearly three years at +2.2% in September, rising costs continue to hamper the efforts of hotel managers to record profit growth.
This month witnessed year-on-year increases in utility (+7.3%), food (+0.6 percentage points) and payroll costs (+0.3 percentage points), which, for the most part, are out of the control of hotel managers.
As a result of the movement in revenue and costs, GOPPAR has once again declined by 1.6% to £36.55 and by 3% to £26.00 for the calendar year.
Back to the old routine for Provincial hoteliers “Unfortunately there appears to be no respite for Provincial hoteliers and we anticipate that profit levels will continue to erode as food prices are set to soar with adverse weather conditions over the summer having blighted UK harvests.
Furthermore, energy suppliers such as Npower and British Gas are set to increase their gas and electricity prices well above the rate of inflation before the end of this year by as much as 9%.
Coupled with a sustained economic recession which continues to have a negative impact on key hotel demand generators, the prospects for the provincial hotel market are not bright.” said Langston.