Regional hotels facing another year of profit decline

Regional hotels may be facing another year of decreasing profits, according to a new report by TRI Hospitality Consulting.

In the study, the firm revealed that whilst hotels outside of the capital city were seeing rising revenue per room (RevPAR) in January 2013, these profits had been cancelled out by rising expenditure. This has been a continuing theme for the past three years in a row.

The numbers suggested that regional hotels had seen a one per cent increase in RevPAR in the first month of the year whilst room rate had also increased by two per cent, comparable to January 2011. This was a stark contrast to hotels in London, where RevPAR had actually fallen by four per cent, compared to this time last year. The figures were part of a HotStats survey which focused on hotel trading figures.

Analysts have suggested that the current economic climate is meaning that costs such as bedroom servicing are rising and therefore hotel profits are suffering.

David Bailey, deputy managing director at TRI Hospitality Consulting, said: “With provincial hotel performance so closely dictated by UK economic output, the recent news that Moody’s has downgraded the nation’s credit rating due to sluggish growth over the next few years will not have been welcome news.

“With the poor start to 2013, on the back of a fifth consecutive year of provincial profit decline, it is critical that the economy begins to recover in 2013 if this general trend is to be reversed.”

Potential employers are advised not to stop hotel recruitment as this would only hamper further local economic growth. Instead, hotel services should focus on cutting back service costs and possibly raising room rates in order to keep the balances black.

Berkeley Scott is a specialist recruitment agency providing hospitality employment solutions.