RevPAR High Note Shattered by Profit Din at UK Hotels

In a scenario that’s becoming exceedingly familiar, and one that illustrates the frequent occurrence of revenue and profit misalignment, RevPAR at hotels in the UK hit a high in July, but GOPPAR turned negative, sapped by rising costs, according to the latest data tracking hotels from HotStats.

July is historically a peak month for UK hotels, with high occupancy enabling premium pricing that helps fuel top-line performance.

This year was no different, with hotels recording a 1.0% increase in RevPAR to £117.25, led by 86.6% room occupancy coupled with a 1.5% year-over-year increase in average room rate to £135.52.

The growth in RevPAR was supported by increases across all hotel departments, including a 1.1% increase in total F&B revenue on a per-available-room basis, which helped contribute to a 1.2% increase in TRevPAR to £166.25.

Regrettably, the revenue rise was roiled by rising costs, led by an increase in payroll, which was up 3.6% YOY on a PAR basis.

As a result, GOPPAR fell by 0.7% in the month to £71.68 PAR. Though this was more than 70% above the YTD 2019 figure, it was yet another month of profit decline on the back of solid RevPAR growth.

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

“UK hoteliers have now recorded a YOY profit decrease in six of the last seven months, while over the same period have recorded a decline in RevPAR just once,” said Michael Grove, Managing Director, EMEA, at HotStats. “It’s incumbent on hoteliers to find areas to reduce expenses in order to enable higher flow through.”

Even London was not spared the ignominy. GOPPAR was down 0.2% YOY even as RevPAR rose 0.7% to £185.14.

The RevPAR recorded in the capital was a recent high and led by a room occupancy of just under 90% and an achieved average room rate of £206.90.

A 5.2% YOY increase in ancillary revenues, to £52.38 per available room, added to the positive revenue growth story and contributed to the 1.7% increase in TRevPAR, which hit £237.52.

However, payroll costs in the city have escalated significantly in the last 12 months, increasing by 5.5% YOY in July alone, pushing profit levels into negative territory.

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

Conversely, July was one of the strongest months of the year so far for hotels in Liverpool, as profit performance soared by 10.6% YOY to £33.59 per available room.

The city hosted a slew of major events and festivals, including the Netball World Cup, held every four years.

The increased demand for accommodation resulted in room occupancy reaching its highest level in 2019 at 86.5%, which, combined with an average room rate that climbed 9.0% YOY to £79.30, resulted in a 7.4% YOY RevPAR increase.

Despite the strong performance this month, it has been a mixed year for hotels in Liverpool and at £28.69 for YTD 2019, GOPPAR remains 2.9% behind the same period in 2018.

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