European Chain Hotels Market Review - Welcome boost in volume for the European hotel market

With the exception of Prague and Budapest, all cities profiled in the TRI Hospitality Consulting European Chain Hotels Market Review for November 2009 enjoyed a growth in room occupancy levels compared to last year. Berlin, London and Barcelona experienced the strongest increase in room occupancy levels of six to seven percentage points.

“The growth in average annual room occupancy levels reconfirms the signs of a slow and gradual sales recovery of the European hotel market”, says David Bailey, deputy managing director, TRI Hospitality Consulting.

Achieved average room rates continue to decline, compared to levels achieved last year, with the exception of London, which increased achieved average room rates by 2.7%. Barcelona experienced the greatest decrease, with achieved average room rates dropping by almost 20% to €115.27.

London continues to outperform the European hotel market, driving room occupancy and achieved average room rate levels, while restraining payroll costs by 4.6%. As a result, RevPAR in the UK capital increased by over 11% and profit per available room (GOP PAR) rose by 9.2% to a notable €113.25. This moves London significantly above other leading European cities such as Paris (€62.98) and Amsterdam (€59.44).

In November 2009, Berlin also experienced a positive growth in occupancy levels, while keeping achieved average room rate declines under control and decreasing payroll cost by 3%. As a result, RevPAR in the German capital increased by 5.7% and profit per available room (GOP PAR) enjoyed growth of an impressive 19.5%.

Prague suffered from a marked decline in occupancy levels and particularly achieved average room rates, resulting in a RevPAR decrease of 24.7% compared to last year. Due to a drop in departmental profitability and an increases in overhead costs and payroll levels, profit per available room (GOP PAR) fell by 47.9% to €22.

This positions Prague at the bottom of our European Chain Hotel Market survey with regards to profit per available room (GOP PAR), below levels achieved in other Eastern European cities such as Budapest (€25.70) and Warsaw (€36.87).

Fall of the Wall anniversary driving visitor numbers
The 20th anniversary of the Fall of the Wall attracted over two million visitors to Berlin, significantly boosting occupancy levels for November 2009. Many hotels in the city were fully booked around the 9th of November due to strong demand both by visitors and the international media. The anniversary also allowed Berlin to benefit from global exposure, as the celebrations for the Festival of Freedom were broadcast around the world According to Berlin Tourismus Marketing GmbH, the city enjoys rising visitor numbers despite the global economic downturn, attributable to the worldwide interest in the ‘new Berlin’.

According to our Chain Hotel Market Review for November 2009, Berlin achieved an average room occupancy of 75.5%, at an average room rate of €129.26. RevPAR increased by 5.7% to €97.52, broadly in line with levels achieved in Vienna.

The boost in volume due to the celebrations is clearly reflected in the city’s market mix. Leisure demand accounted for over 24% of total roomnights in November 2009, almost 8 percentage points above last year, at the expense of corporate demand. Due to improved departmental profitability, reduced overhead costs and payroll levels, the Berlin hotel market successfully boosted profit per available room (GOP PAR) by 19.5% to €82.02, the second highest performance in our European Chain Hotel Market survey, behind market leader London.

By: David Bailey

Source: TRI Hospitality Consultancy