HotStats European Chain Hotels Market Review – February 2013
Dublin, Paris and Moscow register profit growth for the month of February
Of the ten European city markets surveyed, Dublin, Paris and Moscow registered GOPPAR (Gross Operating Profit per Available Room) growth for the month of February according to the latest HotStats survey by TRI Hospitality Consulting.
Paris registered GOPPAR growth of 16.7% as a rise in occupancy (+2.1 percentage points) and average room rate (+1.5%) increased RevPAR (Revenue per Available Room) performance by 5%. The increase in demand was driven by a rise in the volume in the individual leisure and group tour sectors, albeit at discounted rate. The increase in average room rate performance was underpinned by growth in corporate (+4%) and conference (+8.6%) sector rates.
Hotels in the French capital also achieved a 9.1% increase in non-rooms departmental revenue as TrevPAR (Total Revenue per Available Room) grew by 6.5%. Paris’s GOPPAR performance over the 12-month rolling period to February 2013 has risen by 6.7%.
Moscow hotels continue to achieve double digit GOPPAR growth (+17%) as the value and volume of midweek commercial demand continues to increase allowing hotels in the Russian capital to continue to increase average room rate performance (+3.8%). The corporate and conference market sectors accounted for over 80 per cent of total roomnight demand in February.
Similar to Paris, non-rooms department revenue increased at a higher rate than rooms department revenue. Food, beverage and room hire profit per available room increased by an astonishing 36.9% in February.
“It is encouraging to see an increase in food, beverage and room hire revenues having a positive effect on gross operating profit performance in Moscow. Paris and Moscow’s February performance highlights the importance non-rooms departmental revenue streams can have on bottom line performance,” said Jonathan Langston, managing director at TRI Hospitality Consulting.
Dublin also continued to register double digit GOPPAR growth (+34.3%) as the hotel market continues to recover. A significant increase in average room rate performance (+8.0%) was supported by a rise in the volume and value of corporate demand.
“Dublin continues to register strong profit growth on a monthly basis. In the 12 months to February 2013 GOPPAR has increased by 32.9%, due in part to more stable market conditions. Current evidence suggests that there is perhaps yet more scope for profit growth in the Irish capital,” reflected Langston.
Challenging conditions as the majority of markets surveyed register profit decline in February
The remaining seven cities in the latest HotStats survey by TRI Hospitality Consulting registered a decline in GOPPAR performance in what is a typically challenging period for hoteliers.
Amsterdam (-6.2%), Frankfurt (-8.7%), Istanbul (-22.5%), London (-2.1%), Prague (-27.2%), Stockholm (-5.8%) and Warsaw (-15.7%) experienced a decline in GOPPAR as a combination of lower revenues and high operating fixed costs affected profit performance.
London experienced profit decline despite a 0.8% increase in TrevPAR as higher rooms department direct expenses operating costs impacted overall profit performance. Other markets which experienced an increase in revenue performance but a decline in profit included Frankfurt and Stockholm.
In Frankfurt, RevPAR growth of 6.7% was not enough to increase room department profit as a rise in rooms departmental expenses (+6.8%) and payroll costs (+6.5%) impacted profit performance.
The only two markets surveyed which experienced a drop in occupancy performance in February, Istanbul (-6.5 percentage points) and Prague (-3.7 percentage points), achieved the greatest decline in GOPPAR performance.
The Czech capital experienced a significant decline in conference-related roomnight demand when compared to February 2012 performance. Typically a lucrative sector for Prague hotels, the reduction in demand from this sector impacted RevPAR (-8.1%) and TrevPAR (-8.2%) performance.
After experiencing robust growth in TrevPAR and GOPPAR performance since 2010, hotel market performance in Istanbul has notably deteriorated. In the 12 months to February 2013 TrevPAR and GOPPAR has declined by 6.1% and 15%, respectively. Over this period the volume of residential conference roomnight demand has declined by a fifth, which has impacted rooms and food, beverage and room hire revenue performance.
“January and February are challenging months of the year for hoteliers around Europe. Whilst the majority of the markets surveyed registered a decline in gross operating profit performance in February, it should also be noted that eight of the ten cities surveyed have registered an increase in gross operating profit in the 12-month rolling period to February 2013 which is more positive,” said Langston.
The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate primarily in the four and five-star sectors.
Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.
Occupancy (%) is that proportion of the bedrooms available during the period which are occupied during the period.
Room rate (ARR) is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Room Revpar (RevPAR) is the total bedroom revenue for the period divided by the total available rooms during the period.
Total Revpar (TrevPAR) is the combined total of all revenues divided by the total available rooms during the period.
Payroll % is the payroll for all hotels in the sample as a percentage of total revenue.
GOP PAR is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
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©TRI Hospitality Consulting 2013