Rooms Department Profit on the Slide at Hotels in The UK’s North East

Rooms Department Profit on the Slide at North East Hotels

Year-on-year profit per room in the Rooms department at North East hotels fell by 7.2% in June as a result of a drop in Rooms revenue and rising departmental costs, according to the latest data from HotStats. Despite a 1.2% increase in achieved average room rate this month, to 75.06 from 74.20 during the same period in 2015, as a result of a 4.3 percentage point decline in occupancy, RevPAR (Revenue per Available Room) at hotels in the North East fell by 4.1%. In addition to the drop in Rooms revenue, profit levels were further impacted by rising costs across all Rooms department metrics, which included increases in Rooms Cost of Sales (+3.7%), Rooms Expenses (+2.1%) and Rooms Payroll (+4.3%) on a per available room basis.

As a result of the movement in Rooms revenue and costs, departmental profit conversion declined to 68.8% of Rooms revenue this month from 71.1% in June 2015. However, this is not an isolated trend for the month, with profit per room recording a 6.2% decline on a per available room basis across H1 2016. This is in contrast to the Provincial UK hotel market as a whole, which increased profit per room in the Rooms Department by 5.2% this month and 2.2% for year-to-date 2016.

Profit Performance at Hotels in Bristol Stumbles as Occupancy Drops

Despite recording a 2.6% increase in achieved average room rate in June, Bristol hotels suffered a 0.4% decline in RevPAR as occupancy levels dropped by 2.3 percentage points, to 79.8%. Whilst top line performance in the city remains robust, recording a 3.6% RevPAR increase in the first six months of 2016, it is clear that the opening of the 186-bedroom Hampton by Hilton in 2015, and more recently the 167-bedroom Premier Inn, have diluted room occupancy for the sample set.

Overall, a decline in revenue in ancillary departments, including Food and Beverage (-7.3%) and conference and banqueting (- 13.9%) contributed to a 3.0% drop in total revenue this month. And despite savings in both labour (-5.2%) and overheads (- 5.8%) on a per available room basis, profit per room at hotels in Bristol fell by 0.6% in June. This is in contrast to the performance of hotels in the city so far in 2016, with a 4.4% increase in profit per room recorded in H1 2016 to 31.16 from 29.85 in H1 2015.

Cardiff Hoteliers Achieve Strong Profit Growth Driven By Robust Business Segment

Hotels in Cardiff recorded a 3.0% increase in profit per room in June as the commercial segment continues to drive the city towards achieving record top and bottom line performance. Traditionally heavily reliant on major events to boost performance, the commercial sector in the city is now very robust, with the strength of demand translating to a 9.8% increase in the achieved corporate segment rate in June, which contributed to a 9.1% increase year-to-date 2016.

Furthermore, achieved rate in the residential conference segment increased by 2.6% for the month, contributing to a 16.2% increase in this segment rate for the first half of 2016, to 89.79, and is now the highest yielding segment for Cardiff hoteliers. Whilst limited year-on-year RevPAR growth was recorded in June, the city s hoteliers have successfully grown this measure by 33.7% over the last 36 months, to 66.70 in the 12 months to June 2016 from 49.87 three years ago. On a rolling 12-month basis, profit per room in the city has increased by 44.5% to 35.94 in the 12 months to June 2016 from 24.86 in the same period in 2012/13, with, astute hoteliers able to successfully reduce payroll levels over the last 12 months (-2.2 percentage points) as well as managing down overheads.

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Rooms Department Profit On The Slide At Hotels In The UK's North East


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Rooms Department Profit On The Slide At Hotels In The UK's North East


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