London hotel profitability “soaring”

The profitability of London hotels is "soaring", driven by a surge in room rates, the latest HotStats from TRI Hospitality Consulting reveal.

The analysts said that in June room rates passed their previous peak of June 2008 while revPAR (revenue per available room) had risen 15.8% in the past 12 months.

A survey by rival consultants PKF, also published today, said that London hoteliers had posted "stable figures" for the first half of 2010.

But it said properties in the UK regions were still lagging behind the recovery in the capital.

TRI said the rise in revPAR since June 2009, has spurred a 14.9% rise in gross operating profit per available room (GOPPAR) in London hotels.

There had also been an "exceptional increase" in average room rates of 11.2% to £131.23

"As a result, London hoteliers recorded the highest room occupancy levels of the year in June, at 87.5%, an increase of 3.4 percentage points against 2009," TRI said.

The analysts said that in the first six months of 2010, "year-on-year GOPPAR in London increased by 12%.

"This has primarily been driven by a 6.1% increase in average room rates and the excellent cost management by London hoteliers."

Jonathan Langston, TRI's managing director, said: "Hotel managers in London have put on a stunning performance in the first six months of the year.

"Were it not for the major disruptions caused by mother nature in January and April, the

capital's hotels may have ended the first six months ahead of the headline performance levels

achieved prior to the economic downturn in 2008."

PKF said that figures so far for London indicated a "healthy recovery" with occupancy up 2.3% compared with the same period last year from 78.5% to 80.3%.

Room rates rose by 7.1% from £110.51 to £118.40 while room yield increased by 9.6% from £86.78 to £95.

But it said the story in the regions was "slightly different."

While occupancy rose by 3.1% from 65.2% to 67.2%, room rates fell year on year by 3.7% to £60.31 and room yield was down 0.8% to £40.55.

Robert Barnard, PKF's partner for hotel consultancy,  said: "The figures for London over the first half of this year suggest the capital is firmly into its recovery stage which is positive.

"The picture is not exactly the same in the regions, but the increases in occupancy levels so far this year are a good sign for hoteliers.

"We knew at the beginning of this year that over the 12 months of 2010, hoteliers could only expect a slow recovery.

"So far the figures are in line with this and therefore I think hoteliers can feel relatively positive." 

 www.trihc.com  www.pkf.com