UK hotels see profits drop

December marked the third consecutive month of year-on-year profit per available room decrease in the UK, as GOPPAR was down 0.9%.

Hotstats reported that there were nine months last year which reported year-on-year GOPPAR contraction.

Average rate was up 2.5% on the year in December, leading to a 0.1% year-on-year uptick in revpar despite the 1.7-percentage-point drop in occupancy. Ancillary revenue fell by 0.7% compared to December 2018, due to a 2.1% decline in F&B revenue per available room. Revpar recorded a 0.2% decrease.

FREE DAILY NEWSLETTER

Like this story? Subscribe to Operations & Technology!

Hospitality professionals turn to Operations & Technology as their go-to source for breaking news on guestrooms, food & beverage, hospitality and technology trends, management and more. Sign up today to get news and updates delivered to your inbox daily and read on the go.

UK hoteliers were able to keep overheads under control in December, placing 4.5% below the same month of 2018. This reduction was led by a 2.5% year-on-year drop in utility expenses. However, the 3.8% increase in total labour costs on the back of shrinking revenue took a toll on profitability. Thus, GOPPAR for the 2019 financial year closed 0.8% below that of 2018.

Profit conversion in the UK was recorded at 38.4% of total revenue in December.  

In contrast, the city of Bristol marked its eighth consecutive month of profit per available room year-on-year growth in December, at 5.7%. This increase in profit was achieved despite a contraction in revenue.

A 3.2-percentage-point plunge in occupancy drove revpar down 1.4% year-on-year, despite a 3.5% year-on-year increase in average rate. A further 0.7% year-on-year drop in ancillary revenue resulted in a 1.1% fall in trevpar compared to December 2018.

Even though overheads increased by 2.6%, the ability of Bristol hoteliers to flex labour costs enhanced their profit in the context of diminished revenue. The contraction of both rooms labour costs (down 5.1%) and F&B labour costs (down 8.9%) placed December total payroll 1.3% below the same month of 2018. Consequently, goppar for the financial year 2019 was 3.4% higher than 2018.

Profit conversion in Bristol was recorded at 33.3% of total revenue in December.

Read more on