A strong finish to 2018 secured a second consecutive year of GOPPAR growth for UK’s hotels, as they sidestepped challenging economic and political conditions, according to the latest data tracking full-service hotels from HotStats.
The UK recorded a strong 6.7-percent year-on-year increase in profit per room in December, helping hotels to a 1.6-percent YOY increase in GOPPAR for 2018. While positive, it is well off the 5.1-percent YOY increase in GOPPAR set in 2017.
Profit growth in December was led by increases in the Rooms (up 7.2 percent) and Food & Beverage (up 1.0 percent) departments and came despite declines in Conference & Banqueting (down 1.7 percent) and Leisure (down 2.8 percent) revenue, on a per-available-room basis.
The uneven contribution still resulted in a 5.2-percent uptick in TRevPAR in the month to £147.38.
December’s heady increases in both TRevPAR and GOPPAR were not overly impacted by the 3.0-percent YOY increase in total labour costs on a per-available-room basis. Annually, they, identically, were up 3.0 percent YOY.
Meanwhile, as a percentage of total revenue, payroll costs fell by 0.5 percentage points to 27.3 percent of total revenue in the month.
On a per-available-room basis, total overheads were up for the year, growing 3.3 percent YOY. This came as a result of increases in key undistributed operating expenses, including Admin & General (up 2.1 percent), Property and Maintenance (up 5.7 percent) and Utilities (up 9.0 percent).
Profit & Loss Key Performance Indicators – Total UK (in GBP)
| December 2018 v. December 2017 |
| RevPAR: +7.5% to £88.37 |
| TRevPAR: +5.2% to £147.38 |
| Payroll PAR: +3.0% to £40.17 |
| GOPPAR: +6.7% to £56.88 |
The UK hotel market is strong despite it being entrenched in the mire of Brexit and the impact on the economy as a whole. Regardless of the macro climate, and as evidenced by December’s strong profit numbers, savvy hoteliers are wringing out as much revenue gained on the top line, leading to solid bottom-line growth."
—Michael Grove, Director of Intelligence and Customer Solutions, EMEA, HotStats
Hotels in London were also toasting an increase in profit in 2018, which came in spite of a rocky start to the year, as the capital recorded eight consecutive months of profit decline before staging a comeback in May 2018.
Since then, the city has only faltered once, in September, but has now recorded a 3.6-percent increase in profit per room for the year, punctuated by a 17.0-percent increase in December to £98.05.
London hotels recorded increases across all revenue centres in 2018, fuelling a 3.9-percent YOY increase in TRevPAR for the year to £194.33.
It remains to be seen what the outcome of Brexit will be for hotels in London in 2019, but the 4.4-percent YOY increase in RevPAR in 2018 to £140.56, as well as astute cost management, has enabled hoteliers in London to record a robust 44.9-percent profit conversion in 2018.
Profit & Loss Key Performance Indicators – London (in GBP)
| December 2018 v. December 2017 |
| RevPAR: +11.8% to £143.56 |
| TRevPAR: +9.3% to £207.76 |
| Payroll PAR: +2.4% to £49.04 |
| GOPPAR: +17.0% to £98.05 |
Meanwhile, Glasgow GOPPAR fell by 6.5 percent YOY to £40.26 in December; however, this did not impact the city’s positive annual result, as profit per room for 2018 increased by 6.2 percent to £41.42.
It was a mixed month of performance in December, as a 0.2-percent decline in RevPAR was countered by increases across non-rooms revenues, including Food & Beverage (up 3.0 percent) and Conference & Banqueting (up 4.9 percent), on a per-available-room basis.
As a result of the movement in revenues, TRevPAR at hotels in Glasgow increased by 1.1 percent YOY to £119.89 in December and grew a solid 5.4 percent for full-year 2018.
Despite the TRevPAR increase for the month, hotels in Glasgow were hit by rising costs, which included a 3.9-percent jump in total labour costs on a per-available-room basis, pushing total hotel labour costs as a percentage of total revenue to 28.7 percent.
For the total year 2018, labour costs were up 5.1 percent compared to the same period last year.
Profit & Loss Key Performance Indicators – Glasgow (in GBP)
| December 2018 v. December 2017 |
| RevPAR: -0.2% to £55.95 |
| TRevPAR: +1.1% to £119.89 |
| Payroll PAR: +3.9% to £34.41 |
| GOPPAR: -6.5% to £40.26 |
Glossary:
Occupancy (%) – Is that proportion of the bedrooms available during the period which are occupied during the period.
Average Room Rate (ARR) – Is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Room RevPAR (RevPAR) – Is the total bedroom revenue for the period divided by the total available rooms during the period.
Total RevPAR (TRevPAR) – Is the combined total of all revenues divided by the total available rooms during the period.
Payroll % – Is the payroll for all hotels in the sample as a percentage of total revenue.
GOPPAR – Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.