According to Savills UK, Hotel market performance figures showed that the 2012 Olympic Games delivered a gold medal winning performance for the London full-service hotel market as Gross Operating Profit per Available Room (GOPPAR) increased by a staggering 90%, underpinned by Revenue per Available Room (RevPAR) growth of 41%.
After a turbulent June and July which saw market wide RevPAR decline, the phenomenal performance for August, compared to the same month last year, was a timely boost for the London hotel market which, until then, experienced relatively weak revenue growth and no gross operating profit growth over the seven month period to July.Year to date performance (to August) has seen GOPPAR growth of 7% when compared to the same period last year.
Despite some of the negative press and cynicism in the build up to the Olympics regarding reduced levels of demand and over priced hotel rooms over the Olympic period, London hoteliers achieved unprecedented profit growth.
More in-depth analysis shows that the five-star/luxury hotel market and West End hotels were the real winners. Five-star and luxury hotels achieved an incredible 171% increase in GOPPAR in August 2012 over 2011 on the back of class leading growth in RevPAR and Total Revenue per Available Room (TRevPAR) of 64% and 65% respectively (see Graph 1).
Outer London and three-star hotels achieved the lowest GOPPAR growth of all market categories although the level of growth was still impressive at 30%.
The UK's movement back into recession in Q2 12 and the worsening of the Eurozone debt crisis has meant that operating conditions over the first eight months of this year have, on the whole, been challenging.
This, combined with significant increases in supply in the budget and full-service hotel market, has resulted in a significant reduction in growth in TRevPAR and GOPPAR in all hotel market segments. Apart from the respite offered by the Olympics, revenue and profit levels have been relatively fl at since September 2011.
The South African hotel market also needs a boost what with questions raised as to pricing, occupancy and oversupply in the sector. Not withstanding an encouraging growth forecast of 14% plus RevPAR in 2012.
