HotStats European Chain Hotels Market Review – March 2013
Bleak picture as most cities experience first quarter profit decline
Bleak first quarter results were experienced in the majority of cities surveyed, with many cities experiencing poor trading performance results in March according to the latest HotStats survey by TRI Hospitality Consulting.
In the first three months to March 2013 the biggest GOPPAR declines were experienced in Istanbul (-26.9%) and Vienna (-22.0%), whilst Amsterdam market GOPPAR performance remained flat. First quarter GOPPAR decline was also experienced in Brussels (-6.5%), Frankfurt (-0.7%), London (-7.2%), Paris (-3%) and Stockholm (-4.6%).
Budapest was one of the few European cities to buck the trend and register strong percentage profit growth for the month of March. As a result, the Hungarian capital was one of only two cities to achieve profit growth for the first quarter of 2013 of the ten cities surveyed,
Budapest’s first quarter GOPPAR growth was due to stronger March performance, as RevPAR (Revenue per Available Room) increased by 6.1%, underpinned by an increase in demand levels as occupancy rose by 6.4 percentage points. Average room rate performance declined (-4.3%), reflecting the fact that Budapest hotels attracted a higher proportion of lower yielding leisure and group tour demand, relative to commercial-related demand, a sector where demand levels have declined and which typically commands higher rate.
According to the Federation of Hungarian Hotels & Restaurants, the expansion of low-cost carriers including Ryanair and Wizz Air has brought more sightseeing and leisure tourism to Budapest from a variety of destinations. In contrast, there has been a decline in the number of international-standard conferences according to the latest statistics released from the Hungarian Convention Bureau.
March TrevPAR (Total Revenue per Available Room) and GOPPAR (Gross Operating Profit per Available Room) performance in Budapest increased by 4.4% and 14.2%, respectively. Of the ten cities surveyed, the Hungarian capital, along with St Petersburg, was the only city market surveyed to achieve first quarter GOPPAR growth (+4.1%).
“Overall, first quarter market performance has not been robust in what is typically a challenging period for hoteliers. Whilst five out of the ten cities surveyed have experienced rooms and total revenue growth, only two city markets have improved profit performance, and that being from a relatively low base. This clearly highlights operating challenges facing hoteliers in Europe, not only from a top-line revenue perspective, but also managing costs,” said Jonathan Langston, managing director at TRI Hospitality Consulting.
St Petersburg on a steady upward trend
The phenomenal profit increase of 46% for hotels in St Petersburg in the first quarter of 2013 contributed to the city’s continued improving annual gross operating profit performance according to the latest HotStats survey.
GOPPAR performance in Russia’s second city has increased by 17.4% over the 12-month period to March 2013. Improving food, beverage and conference/banquet revenues helped push TrevPAR up 12.2% to €104.37.
Market-wide gross operating profit conversion improved by four percentage points from 14.1% to 18.1% of total revenue in the first quarter of 2013, as hoteliers were able to maintain a relatively stable cost base.
Average room rate performance in St Petersburg decreased by 4.2% during the first quarter of 2013 which was partly attributable to a fall in rate in the conference segment of over 12% compared to 2012. Despite considerable discounting, St Petersburg hotels can command the highest rates in the leisure sector.
Russia’s most popular tourist destination has enjoyed increasing favour amongst Chinese, Indian and Latin American tourists in recent months according to the Russian Tourism Industry Union. Thanks to these new feeder markets, the city registered a new record of 5.7 million visitors in 2012. Airlines and tour operators embrace the rising profile of the “Venice of the North” and add new air-traffic routes to and from Pulkovo Airport.
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