Market Report Europe

Hotel Profit Levels Hit Highs in Europe in September

European Chain Hotels Market Review - September 2018
Temple Of Olympian Zeus Athens Greece - Photo by Héctor Martínez on Unsplash
European Chain Hotels Market Review - September 2018


Hotel performance in Europe remained hot in September, with key performance indicators showing continued resilience.

Year-over-year profit per room increased by 3.7 percent year-over to €96.80, which was second only to the peak recorded at hotels across the region in June at €105.07, and was almost 44 percent above the figure for year-to-date 2018 at €67.34.

The YOY increase in profit per room was driven by growth across all revenue centres, including Rooms (up 3.3 percent), Food & Beverage (up 0.6 percent) and Conference & Banqueting (up 1.6 percent), on a per-available-room basis, which contributed to the 2.5-percent uplift in TRevPAR to €220.98.

September also marked a return to more robust levels of non-rooms revenue performance, illustrated by the contribution from the Food & Beverage department, which was recorded at €60.46 per available room this month, compared to just €44.05 last month.

The positive performance this month was slightly marred by a 0.1-percentage-point increase in Payroll costs, which grew to 28.2 percent of total revenue.

However, GOPPAR growth continues unabated at hotels in Europe and has now increased by 10.4 percent in the nine months to September 2018, against the same period in 2017, with profit conversion this month recorded at a strong 43.8 percent of total revenue.

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

September 2018 v September 2017

RevPAR: +3.3% to €152.31

TrevPAR: +2.5% to €220.98

Payroll: +0.1 pts. to 28.2%

GOPPAR: +3.7% to €96.80

“Profit performance at hotels in Europe typically peaks in the months of June and September, which is when there is an overlap in the major commercial and leisure demand segments, which supercharge performance for hotels across the region,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats. “Hoteliers in Europe will now be keen to maintain profit performance into Q4 2018 and record yet another year of bumper GOPPAR growth.”

Top-line growth for hotels in Europe in September was led by a 4.2-percent increase in achieved average room rate, which grew to €185.43 and offset the 0.7-percentage-point decline in room occupancy to 82.1 percent.

One of the top performing markets in Europe this month was Athens, where profit per room increased by 8.2 percent year-on-year to €136.46.

The uplift in GOPPAR was led by growth in the Rooms department, which increased by 6.1 percent YOY to €203.79 and was fuelled by a 10.6-percent increase in achieved average room rate to €229.33. This offset the 3.7-percentage-point decline in room occupancy to 88.9 percent, although this was a high for 2018.

Top-line growth this month was primarily driven by the commercial segment, as the Greek capital continues to recover its position in the European business market, and included YOY increases in achieved rate in both the corporate (up 6.2 percent) and residential conference (up 4.2 percent) segments.

As a result of growth across all departments, TRevPAR at hotels in the city increased by 5.3 percent in September to €295.21.

The growth in revenue was supported by cost savings, which included a 0.6-percentage-point reduction in payroll to 36.6 percent. As a result of the punchy top-line performance and reduction in costs, profit conversion at hotels in Athens was recorded at 46.2 percent of total revenue.

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

September 2018 v September 2017

RevPAR: +6.1% to €203.79

TrevPAR: +5.3% to €295.21

Payroll: -0.6 pts. to 26.6%

GOPPAR: +8.2% to €136.46

“Hoteliers in Athens have undoubtedly been through a rough time over the last decade due to the challenges in the Greek economy and only exited their most recent recessionary period in mid-2017,” said Grove. “However, the rate recorded in the corporate segment has increased by more than €30 over the last 18 months, suggesting that the market is back on an upward trend.”

In line with the performance of hotels in Athens, properties in Berlin also performed well in September, recording an 18.4-percent increase in profit per room to hit €107.89.

This was the highest GOPPAR recorded at hotels in the German capital in 2018 and was 106 percent above the year-to-date figure at €52.44.

The growth in profit was fuelled by a 14-percent increase in RevPAR, which also hit a high for the year at €171.01. This was primarily due to a 10.8-percent increase in achieved average room rate to €195.37, as well as a 2.5-percentage-point increase in room occupancy to 87.5 percent.

Falling costs, which included a 1.2-percentage-point decrease in payroll to 24.3 percent of total revenue, added to the positive story for the city’s hotels this month, and resulted in profit conversion of 44.8 percent of total revenue.

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

September 2018 v September 2017

RevPAR: +14.0% to €171.01

TrevPAR: +10.7% to €241.09

Payroll: -1.2 pts. to 24.3%

GOPPAR: +18.4% to €107.89

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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.

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