Mixed Signals for the Region’s Hoteliers

September, in a way, was an encouraging month for the North West region’s hoteliers as an increase in business/corporate demand helped support growth in average room occupancy, according to the latest HotStats data from industry experts TRI Hospitality Consulting. As a whole, average room occupancy across the entire North West region was 77.1%, which is slightly above September 2008 performance of 76.5%. Average room rate for the month of September was £67.21 with RevPAR at £51.83. Total revenue per available room (TRevPAR) was £104.02 with average gross operating profit conversion at 34.7% of revenue.

The key commercial centres benefited the most from an increase in business/corporate demand with Liverpool in particular showing particularly encouraging signs. Average room occupancy in greater Liverpool increased from 70.9% in August to 80.9% in September, with average room rate increasing by 3.0% to £67.64. Average room occupancy for September 2009 was above September 2008 performance although a recovery in average room rates remains some way off. The same dynamic is true in Manchester as average room occupancy increased substantially during the month of September to 77.2% from 66.2% in August but at a much reduced average room rate of £69.47 compared to £83.91 achieved in September 2008. 

Across some of the other region’s hotel markets, notable performances include the resilience of the Lancashire hotel market with average room occupancy stable at 82.5%, which supported a slight increase in RevPAR to £50.64 compared to September 2008 and an increase in RevPAR in Cumbria up 2.3% (relative to September 2008) to £68.49 at an average room occupancy of 75.4%.

Whilst all of the region’s hotel markets reported an increase in average room occupancy in September, in the YTD 2009, the region is still some way behind compared to the same period 2008. Average room rate has borne the brunt of the effects of the credit crunch with average room rates down 11.5% across the North West region. Manchester has the dubious honour of leading the pack in this regard, with average room rates having slipped by 15.3% compared to YTD 2008.

It is now 12 months on from the point at which the region’s hoteliers started to feel the effects of the credit crunch and whilst there are some encouraging signs, talk of a full recovery is misplaced, comments TRI Director Charles Scudamore. “The fact of the matter is that occupancy is only one metric of performance, hoteliers should be just as concerned with average room rate, food and beverage revenues, operating costs and profit conversion. Looking at some of these other metrics of performance gives a much more balanced view of the situation; gross operating profit, in hotels across the North West in the 9 months to September 2009, for example is still 21% down on the same period 2008. There is clearly still some way to go.”

TRI Hospitality Consulting collects monthly profit and loss data for more than 9,000 branded full-service hotel bedrooms across the North West region, including samples for Cheshire, Cumbria, Greater Manchester, Merseyside and Lancashire. In addition TRI collects performance data for some 11,000 branded budget hotel rooms across the region. HotStats is the most detailed monthly hotel profit and loss performance database in the UK.