Profits for London Hotels

Profits posted for September have put London hotels on track for the best year ever, according to the UK Chain Hotels Market Review from HotStats, which is published by TRI Hospitality Consulting. This followed a decline in profits during the previous month.

In September, profit per room rose 10.4%, smashing records and contributing to a year-to-date profit growth of 8.4% from £63.79 during the same month last year to £69.15. At £85.64, profit per room at hotels in London increased 24% on the year-to-date average. It was also up about 14% on the pre-recession level of £74.84, which was recorded in September 2007.

Rooms were still the principal contributor to the rise in profits, with revenue per available room (RevPAR) benefiting from a year-on-year 8.8% jump to £122.71. Year-to-date, RevPAR is about 14% up on the £107.72 average. Growth in the capital was driven by a return of strong rate hikes, which were mostly reached in the residential-conference and corporate markets. London hoteliers still have challenges to face when it comes to ancillary spending. This is due to a 2% decline in meeting room revenue and a 2.2% fall in food and beverage revenue per available room.

TRI Hospitality Consulting managing director Jonathan Langston said that the increase in headline performance levels in September comes three years after the collapse of Lehman Brothers and is further evidence that hoteliers in London have put the memory firmly behind them. This has clearly been driven by the commercial sector and echoes the European Cities Monitor, which shows that the British capital is still the best European city for business.

Hotel Consultancy Services partner Robert Barnard has been reported saying that September was a strong month for hoteliers in London, while there were positive results in many regional cities as well. The Spending Review from Chancellor George Osborne is likely to affect hoteliers, as businesses cut back on spending again. The solid figures seen in the last few months are a good starting point for any rough conditions for hoteliers in the future.

However, profit results for other areas of the UK weren’t as good. Contrasting performances were reported in Birmingham and Liverpool, even though both cities hosted major party political conferences. This season usually allows host cities to benefit from a rise in economic activity, with hotels benefiting from the high volume of people. Birmingham posted a 3.9% rise in average room rates to £78.56 and a 4.3% increase in RevPAR. Profit per room for the city rose 0.4% to £46.59. On the other hand, Liverpool saw a 4.3% increase in average room rates and a 3.5% rise in RevPAR, but a 16.7% drop in profit per room to £28.51.