Hotels’ profits grow despite shaky economic climate

Lamont Pridmore - Accountants

According to recent data gathered by HotStats, the Gross Operating Profit per Available Room (GOPPAR) has seen the second year of growth in a row in UK hotels, seemingly un-impacted by the current unsteady political and economic climate.

In December a 6.7 per cent increase in profits was seen in total over the past two years, although 2018’s growth only accounted for 1.6 per cent of that after a growth of 5.1 per cent the previous year.

The data broke the profits down into different areas, including food and beverages – which increased by one per cent – and rooms – which increased by 7.2 per cent.

There were some profit declines, however, conferencing & banqueting, and leisure both went down by 1.7 per cent and 2.8 per cent, respectively. The data was calculated on a basis of per-available-rooms.

Total Revenue per Available Room (TRevPAR) also saw an increase up to an average of £147.38 – 5.2 per cent more than previous years.

The increase in GOPPAR and TRevPAR appeared to offset the rise in labour costs which rose by three per cent over the past year. Payroll costs as a whole made up less of the total monthly revenue last December by 0.5 per cent – down to 27.3 per cent.

Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats has said: “The UK hotel market is strong despite it being entrenched in the mire of Brexit and the impact on the economy as a whole.

“Regardless of the macro climate, and as evidenced by December’s strong profit numbers, savvy hoteliers are wringing out as much revenue gained on the top line, leading to solid bottom-line growth.”