June 2011 represents the 19th month of year-on-year profitability growth for London hoteliers since the collapse of Lehman Brothers triggered the current economic downturn in September 2008, according to the latest HotStats survey of approximately 550 full-service hotels across the UK by TRI Hospitality Consulting.
This month hoteliers in the capital recorded a growth in Gross Operating Profit per Available Room (GOPPAR) of 17.6% to £94.12 from £80.02, which was primarily driven by a 15.1% increase in Revenue per Available Room (RevPAR) to £132.05. This represented the highest margin of GOPPAR growth in the capital since September 2010.
It is easy to forget that in the first six months of 2009 hotels in London suffered a year-on-year decline in profit per room of 14.1%. However, a growth of 12% in the first half of 2010 on top of the year-to-date growth of 10% in 2011 leaves London hoteliers well ahead of pre-recession performance levels.
“London hoteliers seem to be infallible at the moment. They have now convincingly shrugged off the recession to hit new heights,” said Jonathan Langston, managing director of TRI Hospitality Consulting.
The revenue growth this month was primarily driven by a 12.6% increase in average room rate to £147.81 from £131.31 and whilst pressure remains on price in the commercial sector across the majority of the UK, hotels in the capital recorded significant levels of growth in both the corporate (+11.2%) and conference (+25.5%) segments.
Once again, in addition to the strong growth in volume and price, profit levels in the capital were boosted by a 1.7 percentage point reduction in payroll as a percentage of total revenue, with hoteliers in the capital recording a payroll level of just 20.4% of total revenue in June.
In the first half of the year, at 24.8%, payroll levels as a percentage of total revenue at London hotels are 0.6 percentage points below the same period last year, which is a further streamlining of this cost following the 1.2 percentage point decrease during the same period in 2010.
“Whilst the ONS has reported another quarter of limited economic growth in the UK, the growth in revenue and profitability at London hotels has been leveraged by the multi-national origin of both business and leisure visitors to the capital. Added to which, the packed summer season of events in the city continued with accommodation demand derived from major events including Wimbledon, Hard Rock Calling, Taste of London and Royal Ascot,” said Langston.
TRI Hospitality Consulting provides a wide range of services to clients in the hotel sector. It has offices in London, Dubai and Madrid.
For more information contact: Jonathan Langston, managing director 020 7892 2201