Market Report Europe

Challenging Start to 2019 for Hotels in Mainland Europe

European Chain Hotels Market Review - January 2019
EU Flag
European Chain Hotels Market Review - January 2019


Profit per room at hotels in mainland Europe fell by 9.1 percent year-over-year in January - the largest margin of decline in this measure since August 2016 - as revenues dropped and costs escalated, according to the latest data tracking full-service hotels from HotStats.

January is historically a slow month for hotels in Europe and the dip should not portend gloom for the full-year, evidenced by mainland Europe’s very successful year of operation in 2018, during which hotels in the region recorded a 8.8-percent increase in GOPPAR.

The decline in January was led by a 1.3-percent drop in non-rooms revenues, which fell to €47.10, equivalent to 36.7 percent of total revenue. The falling ancillary revenues included declines in Food & Beverage (down 1.5 percent) and Conference & Banqueting (down 0.8 percent), on a per-available-room basis.

RevPAR was down 0.2 percent to €81.19, in spite of a 1.5-percent increase in achieved average room rate to €141.04. Occupancy fell by 0.9 percentage points.

Declines across revenue centres contributed to the 0.6-percent YOY decline in TRevPAR, which fell to €128.29. Falling TRevPAR levels were further hit by rising costs, including a 1.3-percentage-point increase in payroll levels as a percentage of total revenue to 42.3 percent, as well as a 1.4-percentage-point increase in overheads as a percentage of total revenue to 29.0 percent.

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

January 2019 v January 2018

RevPAR: -0.2% to €81.19

TRevPAR: -0.6% to €128.29

Payroll: +1.3 pts. to 42.3%

GOPPAR: -9.1% to €26.65

As a result of the movement in revenue and costs, profit contribution at hotels in Europe was recorded at just 20.8 percent of total revenue, which is significantly below the average for the rolling 12 months to January 2019, at 36.2 percent.

“Whilst blame can undoubtedly be attributed to the time of year and we can’t be too quick to pass judgement on the outlook for 2019, volume levels in the region appear to be stabilising, and even falling back, which will hit ancillary revenues, forcing hoteliers to work harder to generate a profit,” said Michael Grove, Director of Hotel Intelligence and Customer Solutions, EMEA, at HotStats.

One of the markets to suffer the greatest decline in January was Lisbon, which recorded a 6.4-percent decrease in profit per room, which was the fifth month of year-on-year GOPPAR decline in the Portuguese capital since the market came off the boil in July 2018.

Prior to July 2018, profit per room had soared by more than €20 in the preceding 24 months, to hit €53.55 in the rolling 12 months to July 2018. However, a slowing in top-line performance, particularly in room occupancy, has been to the detriment of the bottom line.

This month, despite a 5.2-percentage-point YOY decline in room occupancy, to 51.7 percent, RevPAR in Lisbon increased by 2.2 percent, thanks to a robust 12.5-percent YOY increase in ARR to €121.08.

Despite mixed departmental revenue performance, Lisbon hotels recorded a 1.8-percent YOY increase in TRevPAR, which grew to €99.61 in the month, but was almost €33 behind the TRevPAR recorded in the rolling 12 months to January 2019, at €132.51.

However, growth was impaired by rising costs, which were led by a 1.6-percentage-point increase in payroll as a percentage of total revenue, to 42.7 percent.

Profit margin was recorded at just 22.8 percent in January.

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

January 2019 v January 2018

RevPAR: +2.2% to €62.56

TRevPAR: +1.8% to €99.61

Payroll: +1.6 pts. to 42.7%

GOPPAR: -6.4% to €22.67

Whilst a similar profit contribution was recorded at properties in Madrid in January, it was a very different story for hotels in the Spanish capital, where YOY GOPPAR soared by 31.0 percent in the month.

The growth in profit was led by a 9.1-percent increase in ARR, which hit €151.61 and was a fourth consecutive month of significant growth in rate, helping fuel a 9.4-percent increase in RevPAR for the month to €91.03.

Growth in non-rooms revenues contributed to an 11.3-percent increase in TRevPAR to €142.26.

And thanks to a 3.7-percentage-point decline in payroll levels as a percentage of total revenue, hotels in Madrid recorded a massive year-on-year increase in profit per room to €32.18.

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

January 2019 v January 2018

RevPAR: +9.4% to €91.03

TRevPAR: +11.3% to €142.26

Payroll: -3.7 pts to 43.5%

GOPPAR: +31.0% to €32.18

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.