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London hotels suffer October fall in occupancy rates

Despite continued growth in achieved average room rate, hotels in London suffered a 0.7% decline in Revenue per Available Room (RevPAR) this month as year-on-year room occupancy levels dropped by 2.4%.

In addition to the decline in rooms revenue, hotels in London endured unfamiliar declines across all ancillary departments, including a 7.9% drop in food and beverage revenue to £30.23 per available room and a 4.6% decline in meeting room hire revenue to £7.64 per available room.

While Total Revenue per Available Room (TrevPAR) levels for the month remain approximately 10% above the year-to-date average (£145.77), illustrating the strength that remains in the London hotel market at this time of year, as a result of the downward departmental movement, total revenue levels in the capital dropped by 2.2% during October to £159.46.

In line with the decline in TrevPAR, year-on-year profitability levels in London dropped by 3% this month to £80.87 from £83.41 during the same period in 2010.

This is only the second month in 2011 in which profit per room has declined in the capital, with the first being August, according to the latest HotStats survey of approximately 550 full-service hotels across the UK by TRI Hospitality Consulting.

“Although a decline in profit levels for the city could not be ruled out following the 16% year-on-year increase in profit per room in October 2010, it goes against the robust performance in the city last month when Gross Operating Profit per Room (GOPPAR) London hoteliers record a decline in RevPAR for the first time in 2011 grew by 10.4%,” said Jonathan Langston, managing director of TRI Hospitality Consulting.

Despite the increase in achieved average room rate in October, London hoteliers were faced with another unfamiliar situation of a softening in both the achieved rate in the corporate (-0.9%) and leisure (-0.3%) sectors.

The decline in these segments this month are in contrast to an increase in achieved sector rates of 5.4% in the corporate sector and a 5% increase in the leisure sector in the previous nine months.