UK hotels suffer their largest profit decline since late 2016

, UK hotels suffer their largest profit decline since late 2016, Buzz travel | eTurboNews |Travel News

Hotels in the UK suffered their largest margin of year-on-year profit decline since late 2016, as ancillary revenues fell and costs soared in April, according to the latest data tracking full-service hotels.

The 10.0-percent YOY decline in GOPPAR, to £43.22, was far greater than the 1.0-percent decrease in RevPAR, which came in at £87.39 for the month.

Revenue declines were felt across all departments, including YOY declines in Food & Beverage (down 6.4 percent) and Conference & Banqueting (down 14.2 percent) revenue, on a per-available-room basis.

As a result, hotels in the UK suffered a decline in TRevPAR for the first time in 2019, falling by 2.6 percent to £131.97. YTD TRevPAR is still 0.2-percent above the same time last year, at £125.63.

Declining top-line performance was further hit by ongoing increases in costs, which included a 2.8-percent YOY uplift in payroll to £41.16 per available room, equivalent to 31.2 percent of total revenue.

The drop in profit was the largest YOY decline in this measure since October 2016 when GOPPAR fell by 11.6 percent.
And April was only the second monthly YOY decrease in achieved average room rate since October 2016, falling by 0.8 percent to £113.30.

Profit & Loss Key Performance Indicators – Total UK (in GBP)

April 2019 v. April 2018
RevPAR: -1.0% to £87.39
TRevPAR: -2.6% to £131.97
Payroll: +2.8% to £41.16
GOPPAR: -10.0% to £43.22

“Whether or not unfinished Brexit is to blame, the hope is that the profit deflation this month is an exaggerated blip due to the timing of Easter, rather than something more ominous,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats.

The leisure-led Stratford-upon-Avon hotel market was one location to benefit from the timing of Easter, as events in key visitor attractions across the town, including the RSC Theatre and Guildhall, helped fuel a 10.3-percent YOY increase in RevPAR to £64.30, as the recovery in the market in 2019 continues apace.

However, and in spite of a 2.8-percent increase in ancillary revenues contributing to a 7.0-percent increase in TRevPAR, revenue growth in the month was impacted by a 10.9-percent YOY increase in payroll on a per-available-room basis to £42.40.

As a result, profit per room at hotels in Stratford-upon-Avon fell by 1.2 percent to £28.62. This is equivalent to a profit conversion of 26.0 percent of total revenue.

Profit & Loss Key Performance Indicators – Stratford-upon-Avon (in GBP)

April 2019 v. April 2018
RevPAR: +10.3% to £64.30
TRevPAR: +7.0% to £109.92
Payroll: +10.9% to £42.40
GOPPAR: -1.2% to £28.62

In contrast to the wider UK, it was a positive month of performance for hotels in Reading, with a 4.2-percent YOY increase in RevPAR to £62.08, contributing to a 16.4-percent increase in profit per room and the ongoing upward trajectory in GOPPAR in the town.

The increase in profit was supported by an eighth consecutive month of ARR growth to £89.69, and a sixth consecutive month of room occupancy growth to 69.2 percent.

Profit & Loss Key Performance Indicators – Reading (in GBP)

April 2019 v. April 2018
RevPAR: +4.2% to £62.08
TRevPAR: +6.6% to £114.09
Payroll: +0.9% to £35.43
GOPPAR: +16.4% to £39.95

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Author: Chief Assignment Editor

Chief Assignment Duty Editor based in Honolulu

, UK hotels suffer their largest profit decline since late 2016, Buzz travel | eTurboNews |Travel News