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The 7.0% year-on-year decline in profit per room recorded at hotels in the East Midlands this month was further to an almost uninterrupted period of growth in this measure since January 2014, according to the latest data from HotStats.
March also represented the first month in which RevPAR (Revenue per Available Room) at hotels in the East Midlands has dropped since mid-2014, as it fell by 5.6% year-on-year to £42.90, as a result of a decrease in both room occupancy (-3.4
percentage points) and achieved average room rate (-0.6%). Whilst a drop in RevPAR was somewhat expected as top line growth has stalled since Q4 2015, astute cost management had helped to maintain profit growth for East Midlands hotels in the last six months.
However, such a significant year-on-year drop in profit per room may suggest that this market has reached its peak after a very strong period of sustained growth. Prior to this month, on a rolling 12-month basis, GOPPAR (Gross Operating Profit per Available Room) at hotels in the East Midlands grew by 22.4% from January 2014 (£19.51) to February 2016 (£23.88).
Increase in Visitor Numbers Fuels Continued Profit Growth for Edinburgh Hotels
Hotels in Edinburgh recorded a 7.9% increase in profit per room in March, which contributed to a 5.4% year-on-year increase in GOPPAR for Q1 2016, to £20.02 from £19.00. Whilst declines were recorded in Food & Beverage (-2.7%) and Conference & Banqueting (-8.3%) revenue on a per available room basis this month, this was more than offset by the 9.2% increase in RevPAR to £70.73 from £64.79, which helped drive a 5.6% increase in TrevPAR (Total Revenue per Available Room).
For Q1 2016, the 5.1% RevPAR increase has primarily been driven by a 4.9% uplift in achieved average room rate, which has been led by rate increases in the individual leisure (+7.3%) and group leisure (+21.0%) segments, indicative of growth in tourists to the Scottish capital.
The growth in this segment is further supported by the 37.6% increase in international passengers handled by Edinburgh Airport in the month of March, to 493,200 from 358,450.
The growth in profit per room for the month was also in spite of an increase in both payroll (+4.5%) and overheads (+3.0%) on a per available room basis, with profit conversion at hotels in Edinburgh recorded at 30% of total revenue, a year-on-year uplift of 0.6 percentage points.
Manchester Hotels Bucking Q1 2016 Trend of Profit Decline Across the UK
Hotels in Manchester recorded a 3.3% increase in profit per room for the month of March, which contributed to a 2.4% increase for Q1 2016, to £35.78 from £34.94 during the same period in 2015.
This was in contrast to hotels in the Provinces, which suffered a 4.6% decline in GOPPAR in March, which contributed to a 2.6% year-on-year drop in profit per room for the first quarter of 2016.
Whilst room occupancy declines were suffered in both Manchester and Provincial UK hotels this month, the 7.4% uplift in achieved average room rate in the ‘Capital of the North’, far exceeded the 1.6% increase in the Provinces, and fuelled a 3.5% increase in RevPAR.
Hotel performance in Manchester has gone from strength to strength in recent years. Despite additions to stock in 2015 including the 208-bedroom INNSIDE by Melia and 330-bedroom Motel One Piccadilly, on a rolling 12-month basis, profit per room has increased by 9.3% over the last year, to £43.51 in the 12 months to March 2016, from £39.82 in the 12 months to March 2015.
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