Both London and provincial U.K. hotels saw a boost in August from the Olympics, with GOPPAR in London increasing 90.1% year-on-year while provincial GOPPAR was up 2.3%, according to the latest HotStats survey from TRI Hospitality Consulting.
Average room rate increased by 40.6% from £106.87 (US$173.34) to £150.28 (US$243.52) underpinning a 41% increase in RevPAR, while TRevPAR increased by 39.8%.
“With the Olympics, August was an extraordinary boost for the London hotel market on the back of a decline in June and July GOPPAR performance. Put into context, the RevPAR and GOPPAR growth rate recorded this month is the highest we have seen since HotStats began for the London full-service hotel market,” said Jonathan Langston, managing director at TRI.
Analysis of non-rooms departmental revenue performance also shows that London full-service hotels achieved a significant increase in food, up 15.1% and beverage revenue, up 19.8%, as well as an astonishing 173.7% increase in conference and banqueting room hire revenue.
Many London hotels benefited from hosting large Olympic corporate–related events.
Such a boost in revenue and profit performance has lifted 12-month London market revenue and profit performance.
In the 12 months to July 2012 TRevPAR was up 0.8% and GOPPAR down 0.3% when compared to previous year performance; however, an incredible August produced a significant lift to total revenue of 3.4% and gross operating profit of 4.6% over the 12-month period to August 2012.
“While London market-wide performance in August performance was exceptional, we cannot avoid the fact that there has been a slow-down in revenue and profit growth prior to the Olympics. Factors such as a stable exchange rate, increasing hotel supply pre and post-Olympics, and challenging market conditions in U.K. and wider global economy is likely to temper TRevPAR and GOPPAR growth in London over the next year,” said Langston.
For the month of August provincial occupancy, up 0.5 percentage points and ADR performance, up 2.3%, increased resulting in RevPAR growth of 2.9%. Perhaps unsurprisingly, cities that hosted Olympic events or were chosen as a base to stay for international teams achieved significant gains in revenue and profit performance.
Examples include Cardiff, Wales, which registered an impressive increase in GOPPAR performance of 81.3% to £28.65 (US$46.43), being the second highest increase in GOPPAR growth in the UK, behind London. The Olympic events held in the city were a much needed boost to the Welsh capital which has seen GOPPAR performance deteriorate over the past year
Birmingham, England, also experienced a significant increase in GOPPAR performance, up 30.5%, supported by an increase in RevPAR performance of 13.8% as many hotels benefited from accommodating international teams participating in the Olympics and using Birmingham as a training base.
Manchester, England, also experienced robust GOPPAR growth, up 35.6% for the month of August, boosted by an 8.1% increase in TRevPAR performance.
While the above cities benefited from a strong boost in demand for room-night accommodation, other cities experienced significant GOPPAR decline for the month of August which is typically a challenging month for many U.K. provincial city and large town markets. The Edinburgh full-service market, which usually benefits from a strong program of summer events and attracts a significant number of domestic and international visitors, experienced a 2-percentage point drop in occupancy and 1.2% average room rate decline, with GOPPAR performance down by 7.7%. Glasgow also experienced a 23% decline in GOPPAR performance.
“The varying performance in different U.K. city markets shows how significant one-off events can really boost hotel market performance. Overall, the latest trading performance statistics for the U.K. provincial market may be positive for the month August; however, year-to-date GOPPAR performance is still in negative territory compared with last year,” said Langston.