August a Mixed Bag for UK Hotels

　　August saw a slight boost in profit for provincial hotels but not London hotels, a HotStats U.K. market report from TRI Hospitality Consulting shows.

　　Hotels in London suffered their first year-on-year decline in profit per room since April 2010. At just US$69.37 (£44.41), profit per room at London hotels in August was approximately 50% below the year-to-date average for 2011, and less than half of the achieved profitability level for July.

　　The decline in profitability occurred in spite of a 0.4% year-on-year increase in TrevPAR to US$180.18 (£115.10), which was driven by growth in rooms revenue at +1.1% and food and beverage revenue at +1% per available room.

　　And although volume remained broadly stable against the same period in 2010, with a decline of just 0.4 percentage points to 82.2%, it is clear that London hoteliers have had to yield their roomstock more effectively this month, exemplified by a 5.2% year-on-year decline in the achieved rate in the leisure sector to US$167.28 (£106.86).

　　“Whilst headline performance levels at London hotels typically suffer a decline during August, the performance this month has been further impacted by the timing of Ramadan, as reported in our July press release, as well as the riots, which will undoubtedly have had a negative influence on the number of leisure visitors to the city,” said David Bailey, deputy managing director of TRI Hospitality Consulting.

　　As month-on-month room occupancy levels plummeted by more than ten percentage points, payroll levels in the capital shot up to 29.8% of total revenue, a figure which is 5.2 percentage points above the year-to-date average for 2011 of 24.6%.

　　“London hoteliers have clearly suffered a slight setback as the cost base has remained high from a record breaking July. In addition, the level of anticipated top line growth in August was impacted by the riots and it’s difficult to respond to such events with rapid cost-cutting measures,” said Bailey.

　　Elsewhere in the U.K. hotels fared better in August. Hotels in Edinburgh recorded an 8.9% year-on-year increase in profit per room in August to significantly exceed the levels achieved in London and contribute to a 0.5% overall increase for provincial hoteliers in the U.K.

　　In Edinburgh monthly headline performance figures exceeded those achieved in London, led by a 1.9% increase in room occupancy to 90.4%. August is typically a strong period of operation for Edinburgh hoteliers as festival season drives demand for accommodation.

　　High levels of demand allowed Edinburgh hoteliers to effectively yield their roomstock and a year-on-year RevPAR increase of 8.7% to US$163.19 (£104.25), boosted by a 6.4% increase in achieved average room rate to US$180.49 (£115.30), left RevPAR at Edinburgh hotels approximately 18% ahead of London.

　　Despite the rioting at the beginning of the month hoteliers were able to boost profitability levels in August in both Manchester at +29.1% and Leicester at +21.3%. However, the majority of cities which suffered unrest were impacted by significant declines in profit per room, including Bristol at -29.2%, Nottingham at -36.7%, Liverpool at -13.8% and Birmingham at -23.2%.