Market Report Europe

Robust Rate Growth Drives Profit Increase for Hotels in Europe

European Chain Hotels Market Review - July 2018
Paris Skyline
European Chain Hotels Market Review - July 2018


Hotels in Europe recorded a 16.9% year-on-year increase in profit per room in July primarily fuelled by a 11.3% increase in achieved average room rate, according to the latest worldwide poll of full-service hotels from HotStats.

Profit per room at hotels in Europe soared once again as the World Cup continued in Russia and strong demand from the leisure segment helped fuel increases in top-line performance across the region.

Whilst GOPPAR levels in July were off the high recorded in June, they remained well ahead of the year-to-date figure at €62.47 per available room, and represented a second consecutive month of outstanding profit growth for hotels in the region after a shaky start to the year.

The growth in profit was led by a 11.3% year-on-year increase in RevPAR, which grew to €143.86 and was driven by a 20th consecutive month of year-on-year growth in achieved average room rate to €183.20. Room occupancy was unmoved at 78.5%.

On a rolling 12-month basis, consistent growth has enabled achieved average room rate at hotels in Europe to increase by 6.9% over the last 20 months to €162.99 in the 12 months to July 2018 from €152.46 in the 12 months to November 2016.

Whilst profit growth this month was primarily led by a year-on-year increase in rooms revenue, non-rooms revenue was mixed, as a 1.9% increase in food & beverage revenue was stalled by declines in conference & banqueting (-2.4%) and leisure (-8.0%) revenue on a per-available-room basis.

Despite the mixed performance across the various departments, TRevPAR at hotels in Europe increased by 8.6% year-on-year to €200.24.

Profit & Loss Key Performance Indicators – Europe (in EUR)

July 2018 v July 2017

RevPAR: +11.3% to €143.86

TrevPAR: +8.6% to €200.24

Payroll: -1.8 pts to 28.8%

GOPPAR: +16.9% to €83.70

The positive revenue growth was coupled with cost savings, which included a 1.8-percentage-point decrease in payroll to a 28.8% of total revenue, as well as a 0.6-percentage-point drop in overheads.

Profit levels remained heady in July at €83.70 per available room, which was equivalent to a profit conversion of 41.8% of total revenue.

The robust demand levels were led by the leisure and Best Available Rate segments, which accounted for 57.2% of accommodated roomnights, which is well above the average of 49.0% for the 12 months to July 2018.

“In addition to buoyant demand levels associated with the highly successful World Cup in Russia, temperatures soared across Europe this month signalling that the summer holidays were truly in full swing,” said Pablo Alonso, CEO of HotStats.

“The positive performance in July is welcome evidence for owners and operators across the region of a robust leisure segment to complement the already stalwart commercial sector, which should enable a continued uplift in profit levels.”

In line with the performance of the Russian capital one month earlier, hotels in St. Petersburg benefited from a highly successful period of trading in July as a result of demand associated with the FIFA World Cup 2018. However, the data suggest that hotels in the city failed to fully capitalise on the opportunity.

In contrast to the triple-digit growth in profit recorded by hotels in Moscow in June, hotels in St. Petersburg recorded a year-on-year increase of just 25.5% to €91.42.

And whilst the growth in profit was led by a 61.9% year-on-year increase in achieved average room rate, which grew to €159.58, room occupancy at hotels in Russia’s second-largest city plunged by 17.0-percentage points to 72.1%. As a result, the year-on-year RevPAR increase was more muted at +30.9%.

Furthermore, hotels in St. Petersburg recorded an 80.6% increase in rooms cost of sales (the HotStats measure of travel agent commissions, reservations fees, GDS fees, third-party fees and internet booking fees) this month, which increased to 4.9% of rooms revenue and meant the profit increase in the Rooms department was well below the RevPAR growth for the month.

In addition, a decline was recorded across all non-rooms revenues, led by a 12.2% drop in food & beverage revenue, which meant year-on-year TRevPAR growth was recorded at +19.4% to €142.74.

Despite the missed opportunities, profit conversion at hotels in St. Petersburg was recorded at 64.0% of total revenue this month, aided by a 1.4-percentage-point saving in payroll, which fell to just 13.0% of total revenue.

“St. Petersburg hosted three fixtures of the 2018 World Cup in July and the significant increase in demand for accommodation in the city should have been equalled in the profit growth at its hotels. However, much to the disappointment of owners and operators, this opportunity does not seem to have been fully recognized,” added Alonso.

Profit & Loss Key Performance Indicators – St. Petersburg (in EUR)

July 2018 v July 2017

RevPAR: +30.9% to €114.98

TrevPAR: +19.4% to €142.74

Payroll: -1.4 pts to 13.0%

GOPPAR: +25.5% to €91.42

In Southern Europe, and in line with the buoyant economic profile of the city, hotels in Lisbon recorded another month of positive top- and bottom-line performance in July, punctuated by a 19.5% year-on-year increase in profit per room to €54.69.

The growth in profit per room was driven by a 15.1% year-on-year increase in RevPAR, which was entirely led by an 18.5% increase in achieved average room rate to €34.97, as room occupancy fell by -2.3-percentage points to 77.7%.

This helped to drive a 12.1% increase in TrevPAR to €138.72, which was recorded in spite of declining non-rooms revenue, including food & beverage (-14.2%) and conference & banqueting (-15.6%).

As a result of the strong revenue performance and costs savings, hotels in Lisbon recorded a profit conversion of 39.4% of total revenue in July, and the growth this month contributed to the 6.7% year-on-year increase in profit per room for year-to-date 2018 to €48.26.

Profit & Loss Key Performance Indicators – Lisbon (in EUR)

July 2018 v July 2017

RevPAR: +15.1% to €104.90

TrevPAR: +12.1% to €138.72

Payroll: -1.0 pts to 30.5%

GOPPAR: +19.5% to €54.69


HotStats provides two reporting tools to hoteliers:

Our unique profit and loss benchmarking service which enables monthly comparison of hotels’ performance against their competitors. It is distinguished by the fact that it provides in excess of 100 performance metric comparisons covering 70 areas of hotel revenue, cost, profit and statistics providing far deeper insight into the hotel operation than any other tool.

Our latest innovation in daily revenue intelligence, MORSE. Amongst its reporting are daily and highly granular market segmentation metrics as well as distribution channel and source of booking analysis. It takes daily market intelligence to a whole new level.

For more information contact:
+44 (0) 20 7892 2241

Logos, product and company names mentioned are the property of their respective owners.