Peel Hotels said that it was continuing to see sales hit by uncertainty around Brexit, commenting that it was “difficult to move forward”.
Peel, alongside PPHE, GL and Macdonald Hotels, confirmed plans to pursue refurbishments on its estate, as domestic travel in the UK continued to rise.
At Peel, the company saw sales down 5.1%, operating profit decrease 31.3%, revpar drop 4.2%, occupancy down 3.3%, and average room rate down 1.0% for the quarter to 13 August. The group said that the slowdown in commercial activity experienced in the second half of last year due to uncertainties in relation to Brexit had continued, producing a “disappointing interim result”.
Chairman Robert Peel said: “It is difficult to move forward from an earnings point of view without sales growth however we continue to generate sufficient cash to continually decrease our net debt and to continue the reinvestment in our properties.”
The company said that it would continue to invest in it hotels and would spend GBP700,000 in this financial year “on our strategy of continually improving the standards offered”.
At GL Hotels, the group was also wary post-EU Referendum, commenting: “Our London hotels continue to operate in a challenging environment due to increasing operating costs from the implementation of the National Living Wage and imported inflation. The market is not expected to grow significantly and the group maintains a cautious outlook.”
The company said that it would continue with its refurbishment programme and expected to launch three renovated hotels next year.
The group, which reports in US dollars, had suffered in the face of the falling pound and expected to see revenues and asset values drop as a result.
Macdonald Hotel Group also reported plans to upgrade its estate, with Gordon Fraser, deputy chairman & group managing director, commenting: “Our continuing strong performance and the income from a string of forthcoming joint venture deals will enable us to accelerate our plans to achieve ‘four red star’ and ‘five star’ status at more than 20 of our hotels”.
Reporting full year results, the company reported like-for-like turnover up 5% to GBP7.8m and operating profit up 8% to GBP3.2m.
Fraser said that sales had been driven by the business and conference market, commenting: “A 30% growth in group business, much of which is from Japan, China and the US, helped by the weaker pound, has supported a 2% increase in both like-for-like hotel sales and profits.”
PPHE reported that, during the third quarter, renovation works continued at three of its hotels, two of which were in London, with preparations are underway in order to commence renovation programmes in Amsterdam and Utrecht.
During the quarter the group saw revenue up 9.9%, ADR up 9.2%, occupancy flat and revpar up 9.2%.
Boris Ivesha, president & CEO, said: “We are pleased to report a strong performance in the third quarter as we benefited from positive trading across several of our operating regions and new room inventory in London.
“During the period, we completed the sale and leaseback of the new Park Plaza London Waterloo, raising further capital for future investments.”
Looking ahead, the company said that the fourth quarter was usually the strongest trading period and that trading since 30 September remained consistent with meeting expectations.
The results came as Expedia reported a 20% increase in demand for trips by domestic travellers in the UK in the third quarter.
For the UK as a whole, hoteliers saw positive growth from overseas travellers, with demand from Spain up almost 185%; Ireland up almost 95%; Brazil up 115% and the US up 40%. The data also shows that ADR for hotel rooms in the UK rose overall, notably with travellers from Poland, Austria, India, Thailand and Australia choosing to spend more.
Julie Cheneau, Expedia’s director of market management for the UK & Ireland, said: “UK hoteliers have benefitted from an ongoing and strong marketing campaign from VisitBritain highlighting events and activities across the nation. This, likely along with a weaker pound, means both international and domestic travellers are choosing to holiday in the UK.
“Our data reveals that we are successfully working with our hotel partners to increase demand from key international markets where visitors are more likely to spend more on rooms and other services, as well as stay longer.”
HA Perspective [by Katherine Doggrell]: Loathe as we are to indulge in sweeping generalisations here at Hotel Analyst. sometimes only a broad brush will do and this latest results season paints a picture which is reminiscent of Spain when things were perhaps not so chipper.
Operators including NH and Melia, forced to face their debt issues, sold sites and used the cash to reduce the red and launch refurbishment programmes, with the aim of attracting the higher spending overseas traveller while domestic tourists struggled. This strategy is expected to see them good now that regions such as Turkey and Egypt are recovering from political upheavals, as they compete on quality, not price. Stop me if you’ve spotted any similarities.
As Expedia notes, now is the time to attract the higher-spending guest from overseas, who can pay for a room and food too. Maybe even a spa day. Domestic tourists may be on the rise, but not because of a new-found love for the Birmingham ring road, but because they are too skint to make it to Europe. Operators in the UK appear to have noted this and are spiffing up their offerings. Now might not be the time to remind them that PwC thinks the bounce from the falling pound will have lost momentum next year.