Market Report Europe

Madrid and Warsaw Amongst the Best Performing Markets in March in Europe

European Chain Hotels Market Review - March 2014

HotStats Madrid and Warsaw were amongst the best performing markets in March in Europe, achieving impressive year-on-year increases in gross operating profit per available room (GOPPAR) by 70.7% and 25.1% respectively, according to the latest data from HotStats.

With occupancy shooting up by 10.5 percentage points in the Spanish capital and average room rate (ARR) increasing by 1.4%, revenue per available room (RevPAR) grew by a stunning 20.7%. Similar performances were registered in non-rooms departments and total revenue per available room (TRevPAR) rose by 19.5%. Well controlled operating costs and payroll management resulted in departmental operating profit per available room (DOPPAR) surging by 37.8% and GOPPAR by 70.7%.

Warsaw hoteliers experienced a 9.9% surge in RevPAR thanks to a 1.5 percentage point increase in occupancy and a 7.9% growth in ARR, most notably fuelled by a 20.6% increase in the Residential Conference segment rate. Additional revenue per available room from food (+4.0%), beverage (+13.2%) and meeting room hire (+7.1%) enhanced TRevPAR levels by 10.1% to €119.81. A 2.3 percentage point decrease in payroll combined with proficient operating cost control and stable overheads resulted in DOPPAR and GOPPAR jumping by 10.7% and 25.1% respectively.

Mind the gap for Dusseldorf and Moscow 

Dusseldorf hoteliers managed to increase RevPAR by 2.2% driven by a 2.3% rise in ARR, while occupancy remained virtually flat. However, this performance was cancelled out by negative movements across all ancillary departments, leading to a 0.8% TRevPAR decrease. With DOPPAR also decreasing by 3.9% because of rising operating costs like travel agents commission per room let (+39.6% to €8.67), and with payroll escalating by 1.1 percentage points, GOPPAR went down by 3.1%.

Different city but same story for Moscow hotels in March; the headline performance was positive thanks to a RevPAR growth of 1.9%, but this metric failed to show the full picture. Indeed, revenue per available room derived from food (- 11.2), beverage (-9.1%), meeting room hire (-7.5%) and leisure (-11.6%) decreased, and as a result TRevPAR diminished by 1.9%. A general cost increase underpinned by payroll climbing to 27.2% from 20.5% delivered a GOPPAR drop of 19.7%, producing a profit conversion of 42.5% down from 51.9%.

Paris hit by costs

In March, hotels in the French capital experienced almostflat movements across rooms’ department indicatorsresulting in RevPAR increasing by 0.2%, and with mixedperformance in ancillary departments TRevPAR showed asimilar movement of 0.2%. But a closer examination of costsrevealed direct rooms expenses per room let increasing by5.2% which led to a DOPPAR deterioration of 0.4%, andwith overheads per available room rising by 0.8% driven byadministration and general (+4.2%) and property andmaintenance (+2.1%), GOPPAR declined by 1.4%.

Graph - European Chain Hotels Market Review - March 2014

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