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Post-Olympic Depression Dispatched by London Hotels

2012-10-24

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TRI Hospitality Consulting UK Chain Hotels Market Review - September 2012

London hoteliers dispelled any rumours of a post-Olympic depression as occupancy levels rose by 3.1 percentage points to 89.4% in the months of September according to the latest HotStats survey by TRI Hospitality Consulting.

Despite a year-on-year decline of 3.2% in average room rate from £141.82 to £137.26, the increase in occupancy levels resulted in a 0.6% increase in Revenue Per Available Room (RevPAR) for the month. During the same period, Total Revenue per Available Room (TrevPAR) increased by 1.3%, underpinned by a strong increase in non-rooms departmental revenue of approximately 19%.

“Whilst there were rumours of a potential post-Olympic slump as experienced in previous host cities, which appeared even more plausible if you take the challenging economic environment into account, London hoteliers have responded with the strongest September occupancy performance recorded since HotStats began capturing data for the London full-service hotel market,” said Jonathan Langston, managing director at TRI.

The strong performance can, in part, be attributed to London hosting the most successful Paralympic games in history, drawing record breaking crowds to stadia and event venues; but the capital also witnessed a late increase in visitors as data from our unique HotStats benchmarking service reveals that the increase in occupancy levels was underpinned by a 22% increase in leisure-related demand, whilst corporaterelated demand has remained softer year-on-year.

As a result of the robust growth in non-rooms revenue for London full-service hotels, Gross Operating Profit per Available Room (GOPPAR) for the month increased by 0.8% to £86.41. The growth in profit levels were softened by rising costs, in particular travel agent commissions (4.5%) and utilities (8.1%).

“As always, London continues to exceed expectations. Whether it be in putting on potentially the greatest Olympic and Paralympic games ever or bucking the historic trend of a post-Olympic slump, London hoteliers have benefited directly from a strong summer of events. Despite the initial slump in headline performance figures during June and July, the strong start to the year in addition to the performance in August and September has almost guaranteed that year-onyear performance for London hotels in 2012 will be up on 2011, as profit levels have already increased by 6.6% in the calendar year” said Langston.

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