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Hotel profitability reduced in May

From: Katharine Jordan
Date: Monday, 2nd July 2018

According to both STR and Hotstats, UK hotels recorded a decline in average daily rates in May 2018.  That's comparing year on year figures and it's the first reduction for 19 months.  In addition to the drop in room revenue there was also decline in Conference and Banqueting by 3.5%, as well as food and beverage and leisure.

There was an increase in demand, but this was offset by an increase in supply.  The average daily rate was £93.31. Revenue per available room was also down, by 0.3% to £74.47, despite a 0.5% rise in occupancy levels.  Hotel performance in Europe during May was also down.

There were new hotel openings in London, increasing the room supply by 2% and there are about 9,000 rooms in the pipeline for 2018, which will have a negative effect on profitability. The Royal Wedding on 19 May and two bank holidays did not make any impact on hotels’ performance. 

Hotels in Europe also suffered a decline in revenue, where room revenue was flat an income from all other departments fell.

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