Per-room profits slumped in the UK hotel market during February as a result of increasing running costs, despite revenue increases in other departments.
New data from HotStats has revealed that year-on-year profit per room at hotels in the UK fell by 5.1% in February as cost increases continued to accelerate.
Hotels in the UK recorded a 0.2% year-on-year increase in TrevPAR in February, to £122.64, which was due to increases across all revenue departments, including rooms (+0.4%), food and beverage (+0.2%) and conference and banqueting (+3.6%).
The growth in rooms’ revenue at hotels in the UK in February was driven by a 1.3% increase in achieved average room rate, to £106.70, despite a minor dip in room occupancy.
HotStats’ report showed that, in February, there was a 0.6-percentage point decline in room occupancy, to 73.0%, as volume struggles to grow beyond the current record levels.
“It’s been a tough start to 2018 for hotels in the UK. After several years of consistent growth, the upward trajectory has stalled somewhat, which seems to be as a result of occupancy levels hitting a ceiling,” said Pablo Alonso, CEO of HotStats.
“Now may be the perfect time for hoteliers to consider an alternative strategy, which focuses on searching for opportunities to increase non-rooms revenues, as well as preserving profit levels by reducing costs. This is, of course, easier said than done.”
Additional cost increases were also recorded in overheads, which grew by 0.9-percentage points year-on-year, to 26.3% of total revenue, which was largely due to a 7.1% increase in utility costs, up to £5.55 on a per available room basis.
As a result of the movement in revenue and costs, GOPPAR at hotels in the UK fell by 4.8% year-on-year to £36.65 in February. This was equivalent to a profit conversion of 29.9% of total revenue.