Market Report Europe

European Chain Hotels Market Review - February 2014

RevPAR growth flatters to deceive in Brussels and St Petersburg

HotStats Whilst both cities increased revenue per available room (RevPAR) in February by 1.1% and 3.0% respectively profit per available room fell in both markets, according the latest data from HotStats. 

Average Room Rate (ARR) in Brussels’s hotels remained virtually flat and the RevPAR uplift was driven by a rise in occupancy (+0.8 percentage points). Growth was also recorded in non-rooms revenues and total revenue per available room (TRevPAR) grew by 1.9% to €118.22. However, a 3.7 percentage point payroll increase and rising operating costs eroded departmental operating profit per available room (DOPPAR), decreasing by 2.6% to €55.34. This was compounded by a 6.3% escalation in overheads per available room, leading to a 14.3% fall in gross operating profit per available room (GOPPAR). 

In February, St Petersburg hoteliers posted a 3.0% growth in RevPAR despite a 0.9 percentage point drop in occupancy thanks to ARR increasing by 4.9%. But negative performance in ancillary revenues softened TRevPAR growth to 2.0% to €69.49. A 3.2 percentage point increase in payroll contributed to a DOPPAR and GOPPAR reduction of 5.6% to €36.92 and 13.7% to €12.66 respectively. 

Cologne and Zurich registered revenue and profit growth 

Cologne hotels experienced a 2.3 percentage point increase in occupancy and rising rates across all segments, most notably from Best Available Rate (+13.8%), Corporate (+11.3%) and Leisure (+7.0%), led to an overall ARR increase of 8.4%. As a result, RevPAR increased by 12.2% to €76.60. Despite a significant drop in meeting room hire per available room (-21.0%), revenues from food (+3.8%) and beverage (+16.1%) helped to lift TRevPAR by 8.8% to €112.46. Furthermore operational cost control and efficient payroll management delivered an increase in GOPPAR of 15.3% to €36.05, despite overheads rising by 6.2%. 

In February, Zurich hotels also increased occupancy by 5.3 percentage points but at the expense of ARR, declining by 4.1%, and as a result RevPAR grew by 3.5%. Closer examination of the market segmentation showed rate diminution in the Best Available Rate (-13.1%) and Corporate (-6.5%) sectors, while the Residential Conference and Leisure sectors increased by 3.4% and 3.9% respectively. The gain in TRevPAR of 4.3% was further boosted by C&B productivity with meeting room hire revenue per square meter up by 7.5%. In the meantime, hoteliers managed to control operating costs and payroll as well as to reduce overheads by 3.0% delivering a GOPPAR increase of 12.1% to €41.11. 

Poor trading performance for Munich 

In February, hotels in Munich suffered from a combined drop in occupancy (-2.5 percentage points) and ARR (-7.2%) resulting in RevPAR falling by 10.5%. With other sources of revenue also decreasing, TRevPAR fell by 10.2% to €118.33. A 5.6 percentage point increase in payroll adversely impacted DOPPAR by 18.0%, further exacerbated by rooms and F&B margins deteriorating by 2.5 percentage points to 65.4% and

9.6 percentage points to 9.0% respectively. Despite overheads remaining stable, GOPPAR fell sharply by 34.9% to €23.84 representing a profit conversion of 20.1% down from 27.8%.

Graph - European Chain Hotels Market Review - February 2014

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