London hotels maximise other revenues as room rates peak
London hotels relied on other revenues, such as their food and beverage services, to boost overall revenue in October, as room rates reached their peak and the sector heads into the quieter winter months, according to the RSM Hotels Tracker.
The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows occupancy fell from 81.5% (September) to 78.9% (October) in the UK and from 82.1% to 81.5% in the London market. But encouragingly, occupancy is ahead of levels seen last October in both the UK (77.8%) and London (79.9%).
Average daily rates (ADR) of occupied rooms in the UK decreased from £159.95 (September) to £151.78 (October) and from £242.82 to £235.51 in London. These rates are largely in line with the rates charged in October 2022, at £145.67 in the UK and £235.18 in London. Revenue per available room was down from £130.40 (September) to £119.61 (October) in the UK and from £199.46 to £192.00 in London.
London hotels saw a slight uptick in food and beverage revenues, increasing from £51.73 (September) to £54.14 (October) per room, which softened the decrease in gross operating profits (GOP). GOP fell from 40.1% (September) to 36.8% (October) in the UK and 44.2% to 42.4% in London.
Chris Tate, head of hotels and accommodation at RSM UK, said: ‘With the summer holiday season coming to an end, demand in the hotels market has naturally started to dwindle. Nevertheless, occupancy and room rates are yet to drop off a cliff, likely helped by the return of business travel and families heading off on half-term breaks.
‘What is concerning is that room rates are extremely close to the levels seen in the same period last year. Given high inflation in the cost of employment, food and utilities, this suggests hoteliers are having to spend more to cover these costs and we see that in the fall in gross operating profits.
‘As costs continue to bite and room rates reach their peak, savvy hoteliers are making use of their other service offerings, including food and drink, to top up the shortfall in revenue. For some, this has helped to avoid an even bigger drop in profits.’
