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Q3 2019 ends on high note for UK hotels

Q3 2019 ends on high note for UK hotels

The third quarter ended on a positive note for UK hotels as profit per available room increased on a year-over-year basis for the second consecutive month. The 1.6% YOY GOPPAR boost hints towards what hoteliers hope will be the turnaround of an otherwise unremarkable year.

Average UK hotels’ room rate took center stage in September, recording a 5.0% increase compared to the same month last year. As a result, RevPAR achieved a 3.9% YOY gain even in the face of a 0.8 percentage-point decrease in occupancy.

The leisure and corporate segments commanded the growth in RevPAR, with a 2.1% and a 5.1% YOY rate increase, respectively. Combined, they accounted for 50.3% of the total room nights sold in the month by UK hotels.

Other revenue centers did not share these positive results. Ancillary revenues fell by 2.4% YOY, led by a 4.5% YOY decline in conference and banqueting and a 2.6% YOY decrease in F&B. Nonetheless, UK hotels’ total revenue per available room managed to increase by 1.8% YOY fueled by RevPAR growth.

Not even the 2.2% YOY increase in labor costs and the 0.7% YOY uptick in overheads could stunt profit growth in September. Still, the gap between YTD 2019 profit per available room lags 0.1% behind the same period in 2018.

 

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

KPI September 2019 v. September 2018
RevPAR +3.9% to ₤110.86
TRevPAR +1.8% to ₤163.85
Payroll +2.2% to ₤42.09
GOPPAR +1.6% to ₤69.98

 

Aided by the 2019 Labour Party’s Annual Conference, held between September 21st and 25th, hotels in Brighton recorded a robust 17.1% YOY increase in profit per available room, placing the city’s YTD 2019 GOPPAR 2.0% above its 2018 counterpart.

Rooms revenue achieved a 13.0% YOY gain on a per-available-room basis as a result of YOY increases in both occupancy (up 2.6 percentage points) and average rate (up 9.7%). The positive trend reached ancillary revenues as well, registering a 17.2% lift compared to the same month last year. As a result, TRevPAR climbed 14.4% YOY.

The city also experienced YOY increases in labour costs (up 7.1%) and overheads (up 14.3%) per available room, and profit conversion was recorded at 39.9% of total revenue.

 

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

KPI September 2019 v. September 2018
RevPAR +13.0% to ₤109.02
TRevPAR +14.4% to ₤162.71
Payroll +7.1% to ₤39.35
GOPPAR +17.1% to ₤64.88

 

Conversely, Liverpool hotels were faced with a bleaker landscape. Torrential rain and flooding in the area during the month of September had devastating effects over the city’s revenue and profit generation, slashing GOPPAR by 28.9% on a year-over-year basis.

The combination of a 5.9 percentage-point YOY drop in occupancy and an 8.4% YOY decrease in average rate led to a 14.9% YOY drop in RevPAR, marking its greatest plunge in the past two years. Ancillary revenues were also adversely affected and paced 11.4% below September 2018 results. Not surprisingly, TRevPAR registered a 13.9% decline YOY.

Smaller YOY drops in labour costs (down 0.6%) and overheads (down 0.8%), on a per-available-room basis, were not enough to offset the negative impacts over the top-line metrics, and YTD 2019 GOPPAR placed 7.5% below the same period in 2018.

 

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

KPI September 2019 v. September 2018
RevPAR -14.9% to ₤64.18
TRevPAR -13.9% to ₤88.51
Payroll -0.6% to ₤24.15
GOPPAR -28.9% to ₤30.00