TRI hospitality figures show 20% fall in profit

Comparing year on year, latest figures from TRI Hospitality Consulting show the profitability of UK hotels declined by almost 20% for November.

Income before fixed charges (IBFC) per available room fell to £43.57 last month from £53.88 in November 2007.

TRI blamed the decline on a ‘significant reduction’ in the volume of corporate and conference lets as businesses reined in their expenses. In addition, payroll costs as a proportion of total revenue rose by 1.6 percentage points to 28% last month, while revenue per available room dropped 8.8% to £66.94.

The revPAR fall followed a 4.3pp decline in occupancy to 73.4% and a 3.4% decline in average daily room rate to £91.16.

In London, IBFC per available room decreased by 14.6% year-on-year to £69.79, driven by a 2.7pp increase in payroll costs proportion to 24.6% and an 11% decline in revPAR to £95.52.

Occupancy in the capital was down 5.4pp from November 2007 at 79.9%, while average room rate dropped 5% to £119.58.

Meanwhile, provincial hotels reported IBFC per available room decreased by 24% to £29.60. Payroll costs proportion was 0.6pp higher at 30.5%, with revPAR declining in 6.5% to £51.71.

Regional occupancy dropped 3.7pp to 70%, although rates held up better, falling just 1.5% to £73.88.

The only major provincial cities to report increased profitability last month were Glasgow and Aberdeen. Glasgow benefited from the Celtic vs Man United UEFA Champions League match, the Scotland vs Argentina friendly, a UNICEF conference and there major medical conferences.

In Aberdeen, a combination of strong demand from the oil and gas industries and the limited supply of branded international hotels helped increase occupancy, rates and profits.

‘The overall picture is unfortunately of falling revenue and profit,’ said TRI managing director, Jonathan Langston.

But he added: ‘What is encouraging, however, is that hoteliers are maintaining their efforts to promote their businesses. Our survey shows that sales and marketing, a cost that is often the first to be cut, has not been reduced.’

TRI’s statistics are based on figures from 109 hotels in London and 398 in the regions.