Positive Year End Profit Growth Hides Signs of Fragility at North East Hotels
The 4.0% increase in profit per room recorded at North East hotels in December, which contributed to a very positive 6.7 per cent year-on-year increase in GOPPAR (Gross Operating Profit per Available Room) for 2015, belies a tough end to the year for hotels in the region, as top line performance nose dived, according to the latest HotStats data.
Further to achieving a RevPAR (Revenue per Available Room) peak in October, at £67.43, as a result of St James Park in Newcastle hosting three fixtures in the Rugby World Cup, significant volume declines in November (-4.3 percentage points) and December (-5.5 percentage points) contributed to consecutive months of RevPAR decline at North East hotels of 4.1 per cent and 5.4 per cent, respectively.
Despite the decline in the last two months of the year, hotels in the North East successfully achieved growth in TrevPAR (Total Revenue per Available Room) in 2015 (+1.8%) on the back of the 4.9% increase in 2014. Cost savings in labour (-3.4%) and overheads (-5.6%) enabled hotels in the region to record the 4.0% growth in GOPPAR for the month to £24.82, which contributed to a second consecutive year of profit growth for hotels in the North East in 2015 at +6.7% in 2015, further to the 10.9% increase in 2014.
Bristol Hotels Finish 2015 With a Flourish to Once Again Record Huge Annual Profit Growth
A 6.6% year-on-year RevPAR increase in December contributed to hotels in Bristol recording a 16.3% increase in profit per room for the month. The strong finish to the year ensured significant growth in profit was achieved to year-end 2015, also at +16.3%.
Further to the 11.2% increase in 2014, consistent and strong growth in achieved ARR (Average Room Rate) throughout the year fuelled a 12.0% increase in RevPAR for 2015. Achieved ARR for the city peaked in October at £92.93, as the city benefited from demand displaced from Cardiff during the Rugby World Cup. December was also only the second month in 2015 that the city has recorded a drop in occupancy, which fell by 1.1 percentage points, further to the 1.0 percentage point drop in November.
Bristol remains a key regional hotel market in the UK, driven by the financial sector, the city’s role in the domestic and international aerospace industry and its growing leisure profile. The ongoing growth in the commercial segment has been key to the top line growth recorded at hotels in Bristol, with the achieved rate in the corporate segment increasing by 7.2% in 2015, to £78,52, with a 17.8% increase recorded in the achieved rate in the residential conference segment, to £85.64. The only point of concern for the city in 2015 was the 18.5% increase in Rooms Cost of Sales, to £5.96 from £5.04 in 2014. However, this does not seem to have hampered the ability of local hoteliers to drive profit growth, with a 32.3% GOPPAR increase recorded over the last 24 months.
Astute Leeds Hoteliers Overcome Revenue Drop to Achieve Strong GOP Growth
Despite recording a 2.5% increase in RevPAR for the month, hotels in Leeds suffered a 1.1% decline in TrevPAR in December, which was primarily due to a year-on-year drop in food (-4.5%), beverage (-1.7%) and conference and banqueting (-5.0%) revenue.
However, due, in part to a 5.2% saving in labor costs and a 7.6% reduction in overheads on a per available room basis, equivalent to a combined drop to £54.14 from £57.84, GOP recorded at hotels in Leeds increased by 13.7% for the month.
The positive GOPPAR movement in December, to £43.07 per available room, from £37.88 during the same period in 2014, contributed to a 12.0% profit increase being achieved at hotels in Leeds for year-end 2015. As a result of the movement in revenue and cost, profit conversion at hotels in Leeds was recorded at 33.4% in 2015, against 31.1% during the same period in 2014, an increase of 2.3 percentage points.