Business travellers put off by Olympics

London hotels achieved a fifth consecutive month of profit growth in May but those in the regions saw another decline, reports TRI Hospitality Consulting.

TRI’s latest HotStats report shows occupancy at the capital’s hotels rose by 1.5 percentage points to a ‘staggering’ 84.1% last month, while average room rate was up 1.8% at £139.86, which resulted in a 3.6% increase in revenue per available room (revPAR) to £117.57.

This helped drive up gross operating profit per available room (GOPPAR) by 2.6% to £79.86.

The occupancy growth was largely attributed to the leisure sector, which increased by 3.1 percentage points to 21% of total demand, thanks in part to a number of Olympic test events held throughout May.

In contrast TRI said the city’s hoteliers had witnessed a cumulative 4pp decline in corporate demand, as business visitors have ‘unsurprisingly become more wary about visiting the capital as the Olympics threatens to negatively impact business activity’.

Provincial hotels, meanwhile, reported May revPAR up 2.3% year-on-year at £51.78, following a 1.1pp rise in occupancy to 73.4% and a 0.7% increase in rates to £70.54.

However, payroll costs were up 0.3% which, coupled with a decline in ancillary revenues, depressed GOPPAR by 2.9% to £30.34. The fall in profitability last month followed a ‘short respite’ during April.

TRI said May typically heralded strong levels of more lucrative corporate demand at regional hotels after the primarily leisure-led month of April.

However, this year they suffered a cumulative decline of 2.4pp in the proportion of demand attributed to business travellers.

The ‘much maligned travel agent’s commissions’ were once again a concern for provincial hoteliers, as this measure increased by 8.4% on a per room let basis, to £4.53, equivalent to 6.4% of rooms revenue.

TRI’s HotStats survey is based on data from about 560 full-service hotels across the UK.