ITB 2019 Special Reporting
Final flourish secures annual profit growth for UK hotels
Tuesday, 5th February 2019
Source : HotStats

Hotel news at 4Hoteliers.comA strong finish to 2018 secured a second consecutive year of GOPPAR growth for UK’s hotels, as they sidestepped challenging economic and political conditions.

The UK recorded a strong 6.7-percent year-on-year increase in profit per room in December, helping hotels to a 1.6-percent YOY increase in GOPPAR for 2018. While positive, it is well off the 5.1-percent YOY increase in GOPPAR set in 2017.

Profit growth in December was led by increases in the Rooms (up 7.2 percent) and Food & Beverage (up 1.0 percent) departments and came despite declines in Conference & Banqueting (down 1.7 percent) and Leisure (down 2.8 percent) revenue, on a per-available-room basis.

The uneven contribution still resulted in a 5.2-percent uptick in TRevPAR in the month to £147.38.

December’s heady increases in both TRevPAR and GOPPAR were not overly impacted by the 3.0-percent YOY increase in total labour costs on a per-available-room basis. Annually, they, identically, were up 3.0 percent YOY.

Meanwhile, as a percentage of total revenue, payroll costs fell by 0.5 percentage points to 27.3 percent of total revenue in the month.

On a per-available-room basis, total overheads were up for the year, growing 3.3 percent YOY. This came as a result of increases in key undistributed operating expenses, including Admin & General (up 2.1 percent), Property and Maintenance (up 5.7 percent) and Utilities (up 9.0 percent).

Profit & Loss Key Performance Indicators – Total UK (in GBP)
December 2018 v. December 2017

  • RevPAR: +7.5% to £88.37
  • TRevPAR: +5.2% to £147.38
  • Payroll PAR: +3.0% to £40.17
  • GOPPAR: +6.7% to £56.88

“The UK hotel market is strong despite it being entrenched in the mire of Brexit and the impact on the economy as a whole,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats. “Regardless of the macro climate, and as evidenced by December’s strong profit numbers, savvy hoteliers are wringing out as much revenue gained on the top line, leading to solid bottom-line growth.”

Hotels in London were also toasting an increase in profit in 2018, which came in spite of a rocky start to the year, as the capital recorded eight consecutive months of profit decline before staging a comeback in May 2018.

Since then, the city has only faltered once, in September, but has now recorded a 3.6-percent increase in profit per room for the year, punctuated by a 17.0-percent increase in December to £98.05.

London hotels recorded increases across all revenue centres in 2018, fuelling a 3.9-percent YOY increase in TRevPAR for the year to £194.33.

It remains to be seen what the outcome of Brexit will be for hotels in London in 2019, but the 4.4-percent YOY increase in RevPAR in 2018 to £140.56, as well as astute cost management, has enabled hoteliers in London to record a robust 44.9-percent profit conversion in 2018.

Profit & Loss Key Performance Indicators – London (in GBP)
December 2018 v. December 2017

  • RevPAR: +11.8% to £143.56
  • TRevPAR: +9.3% to £207.76
  • Payroll PAR: +2.4% to £49.04
  • GOPPAR: +17.0% to £98.05

Meanwhile, Glasgow GOPPAR fell by 6.5 percent YOY to £40.26 in December; however, this did not impact the city’s positive annual result, as profit per room for 2018 increased by 6.2 percent to £41.42.

It was a mixed month of performance in December, as a 0.2-percent decline in RevPAR was countered by increases across non rooms revenues, including Food & Beverage (up 3.0 percent) and Conference & Banqueting (up 4.9 percent), on a per-available-room basis. 

As a result of the movement in revenues, TRevPAR at hotels in Glasgow increased by 1.1 percent YOY to £119.89 in December and grew a solid 5.4 percent for full-year 2018.

Despite the TRevPAR increase for the month, hotels in Glasgow were hit by rising costs, which included a 3.9-percent jump in total labour costs on a per-available-room basis, pushing total hotel labour costs as a percentage of total revenue to 28.7 percent.

For the total year 2018, labour costs were up 5.1 percent compared to the same period last year.

Profit & Loss Key Performance Indicators – Glasgow (in GBP)
December 2018 v. December 2017

  • RevPAR: -0.2% to £55.95
  • TRevPAR: +1.1% to £119.89
  • Payroll PAR: +3.9% to £34.41
  • GOPPAR: -6.5% to £40.26
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