November 2012 London Hotels Suffer Second Worst Profit Decline of 2012

Hotels in London suffered declines across all headline performance measures this month which led to a 5.6% drop in profit per room as the wave of euphoria which London hoteliers have been riding since the summer came crashing down, according to the latest HotStats survey of approximately 560 full-service hotels across the UK by TRI Hospitality Consulting.

Whilst November 2011 was a stinker, with profit per room dropping by 2.4% for hotels in the capital, the same month this year was far worse. Aside from the 9.3% decline in Gross Operating Profit per Available Room (GOPPAR) in June, at 5.6%, this month was the worst year-on-year drop in profit in 2012.

The 1.4% year-on-year increase in food and beverage revenue to £35.50 per available room was not enough to offset the 2% decline in Total Revenue per Available Room (TrevPAR) this month, which was primarily due to the 3% decline in rooms revenue and a 7.1% drop in meeting room hire revenue per available room. 

Despite a 0.1 percentage point increase in the proportion of demand attributed to the residential conference sector, this segment was clearly weaker than in November 2011, with the sector rate declining by 7.9% to £148.66. 

In addition, rate declines were also suffered in the nondiscounted Best Available Rate (-7.2%), leisure (-2.6%) and groups/tours (-6.7%) segments, which contributed to the overall decrease in achieved average room rate of 2.7% to £136.41 from £140.19 during the same period in 2011. 

“Not even a 3% increase in the number of visitors to WTM, to almost 29,000 trade visitors, was enough to save face for hotels in London and the drop in achieved average room rate for November was the greatest year-on-year margin of decline in this measure in 2012.

Although volume remained strong in the city and hotels in London are undoubtedly on course to achieve a third consecutive year of profit growth, it is unlikely that hoteliers will be popping champagne corks as they look to more challenging times ahead,” said Jonathan Langston, managing director of TRI Hospitality Consulting. 

The decline in revenue levels also led to an uncharacteristic increase in payroll for hotels in the capital, up by 1.5 percentage points to 23.6 per cent of total revenue for the month. 

Despite the decline across all measures, profit levels remained high for the city in November at a GOPPAR of £79.10, approximately 5% above the year-to-date average, and at a conversion of 48.6% of total revenue.

Click here ( Adobe Acrobat PDF file) to view statistics.

For more information contact:

Jonathan Langston, managing director 020 7892 2201

jonathan.langston@trihc.com

David Bailey, deputy managing director 020 7892 2202

david.bailey@trihc.com

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