25 July 2008

Profits fall at UK provincial hotels

Rising food and fuel prices have led to a fall in profits for UK provincial hotels, according to a recent report. Average daily income for the chain hotels covered in the HotStats survey, fell 6.9% in June to Ã&#pound;39.69 per available room.

Slowing demand also affected profits, with average occupancy falling 2.1 per percentage points to 74.6%. Combined with a weak growth in room rates, this resulted in a 1% drop in revenue per available room to Ã&#pound;56.54.

Ã¢â¬ÅâœGiven an increasingly competitive environment, rising costs cannot be passed onto the guest, so are directly hitting the bottom line,Ã¢â¬~ said Jonathan Langston, managing director of TRI Hospitality Consulting which conducted the HotStats survey.

Hotels in the capital fared much better during June when 109 of the 512 sampled reported a relatively positive month. Although year-on-year occupancy dipped by 1.5 percentage points, corporate and leisure demand remained buoyant.

Average occupancy of 85.5% in London enabled a 5.7% increase in achieved average room rate, leading to revenue and profit growth.

Ã¢â¬ÅâœAchieved average room rate in London increased well above inflation, enabling hotels to maintain the same 2% level of growth over two consecutive months,Ã¢â¬~ said Langston.

By Linsey McNeill