The economy and weather impacted profits at hotels in the Provinces far more than in London, according to the latest HotStats survey.

The continuing effects of the economic downturn alongside the 'white-out' across the UK resulted in profitability in the provinces being recorded at approximately a quarter of the level achieved in London hotels in the month of January 2010.

Gross Operating Profit per Available Room (GOPPAR) in Provincial UK was recorded at ?0.86 following an 18.9% decline in
profitability against the same period in 2009. This is compared to a GOPPAR of ?2.48 at London hotels following a growth in profitability of 19.2%.

January is typically a challenging month for the hotel industry, with leisure visitors suffering from a spending hangover after the indulgence of Christmas and the wheels of business creaking back into action. However, the addition of poor weather through most of the month has forced Provincial average room rates to decline further downwards than in January 2009, by approximately 6.2%, to ?4.07.

"For many businesses and individuals across the UK, 2010 was expected to be a period of consolidation and it was widely anticipated that January would provide a good indication of what UK hoteliers can expect this year. However, it would be unjust to use January as a barometer for the rest of the year when the UK transport infrastructure frequently ground to a complete standstill and a high percentage of leisure and business travellers enjoyed an extended Christmas break,?said Jonathan Langston, managing director, TRI Hospitality Consulting.

A one per cent increase in the level of payroll as a percentage of total revenue, to 39.8%, also contributed to the overall decline in profitability across the Provincial UK in January. This is compared to a 2.5% decrease in payroll as a percentage of total revenue at London hotels. As a result, in January 2010, the payroll department in provincial hotels was ten percentage points less efficient than those in London.

In January 2010, the fortunes of city markets across the UK varied greatly. According to the latest HotStats survey from TRI Hospitality Consulting, those leisure destinations which enjoyed a strong performance in the fourth quarter of 2009, due to demand driven by autumn weekend breaks have been hit by a decline in revenues and a burgeoning workforce. A payroll level in excess of 40% of total revenue has contributed to massive declines in GOPPAR in both Brighton (-53%) and York (-37%) in January 2010.

London hoteliers continue to defy the odds

London escaped with only a dusting of snow compared to the debilitating levels experienced in the provinces.

In addition, the New West End Company reported a 6.1% rise in retail sales in Bond Street, Oxford Street and Regent Street, compared to the same month in 2009. A combination of these factors and the continued highly competitive rate offerings by London hoteliers led to an increase in Revenue per Available Room (RevPAR) in the capital of more than 9% in January, to ?6.52, according to the latest HotStats survey.

In contrast to a 23.4% decline in profitability reported by TRI Hospitality Consulting in January 2009, a 19.2% increase in GOPPAR during the same period in 2010 leaves London hoteliers only slightly behind the levels of profitability per available room achieved prior to the credit crunch in January 2008.

"London hoteliers appear to have carried on where they left off in the last two months of 2009, with room occupancy returning to pre-credit crunch levels. The growth in average room rate will remain a challenge for the foreseeable future as the attractiveness of London for international leisure visitors its value for money offering due to the weak sterling,"added Langston.

Snow storms hinder growth in passenger numbers at BAA airports

Although Heathrow was the only UK airport to remain open during the poor weather in January, albeit with a significantly compromised service, the airport experienced a decline in passenger numbers of approximately 0.5%. According to BAA, without the bad weather causing the loss of approximately 145,000 passengers at the airport, traffic would have grown by an estimated 2.5%.

Potentially as a result of dozens of inbound and outbound flights from Heathrow being cancelled, according to the latest HotStats survey, room occupancy levels at hotels in proximity to the UK's primary airport increased by 5.6 percentage points to 70.5% with a 0.1% increase in average room rate to ?5.50, driving a 9.7% increase in RevPAR in our full-service sample.

The collapse of the airline Flyglobespan in December 2009 had a further impact on passenger numbers in Scotland in January. Compared to last year, passenger numbers in Glasgow were down 12.2%, Edinburgh down 7.4% and Aberdeen down by 13.6%.

Overall, in January, BAA airports handled approximately 7.2 million passengers, a decline of 3.1% on 2009. Without the disruption, it is estimated that the drop would have been 0.3%.