Market Report U.K.

London Hoteliers Report 14.5% TrevPar Decline in August

Hotel performance last year was boosted by the 2012 Summer Olympics held in London and several satellite cities from July 27 to August 12, and the expected year- on-year drop was further fuelled by a fear of oversupply created by pre-Olympic developments.

HotStats As anticipated, the year-on-year comparison for London’s hotel market in August was negative with total revenues per available room (TrevPar) decreasing by 14.5% and a drop in Gross Operating Profit per available room (GOPPAR) of 27.7%, according to the latest HotStats survey of 624 full-service hotels across the UK.

Hotel performance last year was boosted by the 2012 Summer Olympics held in London and several satellite cities from July 27 to August 12, and the expected year- on-year drop was further fuelled by a fear of oversupply created by pre-Olympic developments.

Inevitably RevPar in August showed a year-on-year decrease of 12.4%,. Considerable differences in the market mix caused meeting room revenues to drop by 60% which contributed to the overall year-on-year fall in TrevPar of 14.5%. Besides decreasing revenues, profitability in the rooms department was impacted by cost increases such as direct expenses (-5.1% per room let). 

However, in the fairer comparison with 2011 performance the picture is much more positive: RevPar in the month in 2013 was a massive 26.4% above August 2011 and the two-year perspective shows that departmental profitability improved by 3.3 percentage points compared to August 2011 when rooms payroll was higher than this year. 

Rising rooms revenues and cost control allowed hoteliers in London to register profit growth in the rooms department of over £20 per room let (2013 vs. 2011).Similarly, the strength of the conference segment in August 2012 secured additional non-rooms revenues and profits such as £11.20 F&B operating profits per available room (which decreased by approximately 60% this year). Consequently F&B profits (PAR) were recorded at 73% above August 2011. 

When comparing August 2013 as the post-Olympic year to 2011, the pre-Olympic year, hoteliers achieved an increase of approximately 22.4% in TrevPar and 49% in GOPPAR. To put that into context, GOPPAR in Paris grew by approximately 33% over the same period.Table - London hotel operating statistics August 2013


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