Tag: HotStats

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HotStats: European hotel rates down 5 per cent in July

Mainland Europe hotels saw a 5 per cent decline in average room rate to €170.60 in July, according to data from HotStats.

Gross operating profit per available room (GOPPAR) was down by 9.4 per cent year on year. In addition to being the sixth month of year-on-year GOPPAR decrease in the region since the beginning of 2019, it was also one of the greatest months of profit decline this year.

“The drop in average room rate is disconcerting,” said Michael Grove, managing director, EMEA, at HotStats. “Especially since it’s the second consecutive month that rate has dropped year on year, after positive rate growth in the subsequent five months of the year and all of 2018.”

For hotels in Moscow, it was a case of hotel rates returning to normal levels after last year’s 2018 FIFA Men’s World Cup, as average room rate fell by €157.06 year on year to €92.86. However, hotels in the Russian capital did successfully record the highest room occupancy of the year so far, at 87.9 per cent.

In contrast to the regional falls in room rate, hotels in Nice saw a typical summer increase as room occupancy hit 90.2 per cent and a high was recorded in average room rate at €267.92.

Elsewhere in the world, hotel rates in the Middle East and North Africa (MENA) fell to €119.19 with occupancy at 67 per cent. Hotels in Dubai were among those experiencing the biggest falls, with average rates seeing a 10.3 per cent decrease year-on-year.

“Profit decline in MENA has now become a trend rather than a blip,” said Grove. “With average room rate showing no sign of negative year-over-year letup, hoteliers will have to find cost-cutting measures to obtain positive GOPPAR increases in the interim.”

It was a different story across the pond, where hotels in the US saw a 0.9 per cent rise in average room rate to $201.51 and a 0.6 percentage point jump in occupancy to 81.1 per cent.

“Hotels in the US are bucking global profit trends, with only three months over the last 22 when GOPPAR turned negative,” said David Eisen, director of hotel intelligence, Americas, at HotStats. “Operators are doing an admirable job of making sure top-line gains result in bottom-line success, but they will need to continue to drive flow through in order to maintain and keep these gains afloat.”

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Newcastle the exception as UK hotels show decrease in 2019 profits

Increased costs have dented profit margins at UK hotels in May, despite RevPAR (revenue per available room) growth.

The UK hotel business now has a year-over-year decrease in profits in each month of 2019, according to the new data from HotStats Hotels.

In June, the YOY decline in GOPPAR (gross operating profit per available room) was at three per cent, with a slight increase of 0.3 per cent in RevPAR to £93.84.

More positive news reveals that revenue levels have stayed buoyant, with YOY increase in revenue streams such as food and beverage (a 3.5 per cent rise) and conference and banqueting figures up by 5.6 per cent. This contributed to a one per cent rise in TRevPAR (total revenue per available room) to £145.13.

Despite this upturn, revenue growth was whittled away by increased costs such as a 4.5 per cent YOY rise in payroll to £41.71, and a 2.3 per cent jump in overheads to £31.29.

More promisingly, profit conversion stayed constant at 37 per cent of total revenue.

There were some UK cities that bucked the trend, such as Newcastle hotels, which saw a 17.2 per cent YOY increase in profit per room to £30.72. A number of events in the northern city attributed to this hike including the Great Exhibition of the North, the Heineken Champions Cup and the European Rugby Challenge Cup finals.

This was the strongest GOPPAR performance in Newcastle since September and recorded a high for 2019, which saw a decline in profit since 2018, due to an increase in supply.

The region will receive a further boost from Gateshead Quays, which is expected to cost around £260m, and will be completed by 2023, with the addition of new hotels.

Peter Udall, Gateshead Council’s service director told M&IT: “The Quays is a catalyst which will raise the profile of the region and make it worthy of coming to. It is the start of an urban regeneration and somewhere people want to invest in.”

Aberdeen hotels have not fared so well, with an ongoing decline in YOY profit per room, which dropped by 7.8 per cent in June to £17.00 and contributed to the 22.9 per cent YOY decline for 2019.

The average room rate fell by five per cent in the month to £57.52 and has now dropped by almost £25 since 2016.

Profit & Loss Key Performance Indicators – Newcastle (in GBP)

KPI May 2019 v. May 2018
RevPAR +10.2% to £64.97
TRevPAR +3.8% to £93.84
Payroll -7.2% to £24.68
GOPPAR +17.2% to £30.72

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HotStats report UK hotel rates down 11 per cent in April

Hotels in the UK saw an 11 per cent year-on-year decrease in average room rate to £102.35 in April.

And there was also a 1.6 per cent year-on-year drop in room occupancy to 75.9 per cent during the month, according to the latest data tracking full-service hotels from HotStats.

Hotels in the UK suffered their largest margin of year-on-year profit decline since late 2016, as ancillary revenues fell and costs soared in April,.

The 10 per cent year-on-year decline in GOPPAR (gross operating profit per available room) to £43.22 was far greater than the 1 per cent decrease in RevPAR (revenue per available room), which came in at £87.39 for the month.

Revenue declines were felt across all departments, including declines in food and beverage (down 6.4 per cent) and conference and banqueting (down 14.2 per cent) revenue.

“Whether or not unfinished Brexit is to blame, the hope is that the profit deflation this month is an exaggerated blip due to the timing of Easter, rather than something more ominous,” said Michael Grove, director of intelligence and customer solutions, EMEA, at HotStats.

The leisure-led Stratford-upon-Avon hotel market was one location to benefit from the timing of Easter, as events in key visitor attractions across the town, including the RSC Theatre and Guildhall, helped fuel a 10.3 per cent increase in RevPAR to £64.30, as the recovery in the market in 2019 continues apace.

Occupancy was at 75.2 per cent, up from 70.1 per cent year on year, while the average room rate was up 2.6 per cent on 2018 at £84.42.

In contrast to the wider UK, it was a positive month of performance for hotels in Reading, with a 4.2-percent increase in RevPAR to £62.08, contributing to a 16.4 per cent increase in profit per room.

The increase in profit was supported by an eighth consecutive month of ARR growth to £89.69, and a sixth consecutive month of room occupancy growth to 69.2 per cent.

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Hotels faced a tough start to 2019

According to the latest data tracked by HotStats, the UK hotel industry has had a rough start to 2019, with rising costs biting into profits.

Total gross operating profit per room came in at £35.44 in February – a 4.4 per cent drop on the same month in 2018.

Despite a 0.5 per cent increase in revenue per available room (revpar), non-room revenues dropped 0.4 per cent to 36.2 per cent of total revenue. This included a 0.7 per cent decrease in food and beverage and a 1.3 per cent decline in conference and banqueting.

Still, hotels managed to hit a 0.2 per cent gain in overall revenue. However, this was wiped out by rising costs, including a 0.5-point increase in payroll as a percentage of total revenue to 32.8 per cent.

The biggest cost increase proved to be utilities, which rose 8.7 per cent year on year to £5.98 per available room – equivalent to 4.8 per cent of total revenue. This was followed by an 8.2 per cent hike in sales and marketing expenses.

As a result, profit contribution at UK hotels was recorded at 28.7 per cent of total revenue, which is far below the average of 38.2 per cent for the 12 months to February.

Michael Grove, director of intelligence and customer solutions, EMEA at HotStats, said: “While top-line numbers have actually been positive – albeit slightly – rising costs are having an adverse impact on flow through.”

In contrast to the UK averages as a whole, properties in Cardiff saw an 8.9 per cent year-on-year increase in profit per room, owing largely to Wales hosting England in the 2019 Six Nations Rugby tournament.

But in Edinburgh, despite the city hosting Six Nations matches, gross operating profit for hotels fell 27.7 per cent – the Scottish capital’s sixth consecutive month of profit decline.

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European hotel profits fall as hotel openings increase competition

Profit per room at hotels in mainland Europe fell by 9 per cent year-on-year in January – the largest margin of decline in this measure since August 2016 – as revenues dropped and costs escalated, according to the latest data from HotStats.

However, conference average room rate in January was up 3.7 per cent year-on-year. Total conference and banqueting revenue exclusive of rooms was up 0.5 per cent in the month.

A glut of new hotel bedrooms throughout Europe seems to have created more competitive pricing.

David Eisen, director of Hotstats hotel intelligence and customer solutions, said: “I’d say that new supply does have an impact on demand, weakening it to some degree. In 2018, more than 53,000 rooms opened throughout Europe, which was reportedly the highest number of new hotel openings ever recorded. This has an impact on occupancy levels.”

January is historically a slow month for hotels in Europe and the dip should not portend gloom for the full year, according to the report. Hotstats says that this is evidenced by mainland Europe’s very successful year of operation in 2018, during which hotels in the region recorded a 9 per cent increase in GOPPAR (total gross operating profit for the period divided by the total available rooms during the period.)

But within the average figures, the story varied throughout Europe with Lisbon, for example, recording a 6.4 per cent decrease in profit per room while Madrid’s total gross operating profit GOPPAR soared by 31 per cent in the month. The growth in profit was led by a 9 per cent increase in average room rate, which hit €151.61 and was a fourth consecutive month of significant growth in rate.