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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

French hotels polish up their star ratings

France, the world's top tourism destination, is polishing up its hotel star ratings and introducing a new luxury five-star category to help travellers know what to expect.

The new rating criteria will apply to 18,000 hotels across France, many of which are showing off stars awarded under the previous ranking system that dates back to 1986.

The upgraded star system went into force at the weekend when details were published in the government gazette.

The most spectacular change is the new five-star category -- already claimed by some 60 hotels such as the world-class Paris Ritz or the Hotel Negresco in Nice.

Industry leaders say the five-star category will help France face tough international competition at a time when the hotel business is struggling to recover from the global downturn.

"The terms of reference were out of date," said Christine Pujol, president of the hotel owners' main trade group Umih.

"Customers did not know what to expect any more from a two-star hotel," added Genevieve Balher, president of the Synhorcat group representing the hospitality business.

A hotel ranked in 1986 may well have kept its stars without undergoing any renovation and there is no control over the ranking, she said.

Under the new criteria, stars will be attributed for a period of five years by accredited auditors instead of a government agency. The prefect or state official for a department will however have the final word on granting stars.

The zero-star hotel is consigned to history under the new regulations, meaning that the lowest possible standard of comfort is now the one-star hotel.

A one-star room should be no smaller than nine square meters (96 square feet) and have a shared bathroom with guests from no more than seven other rooms.

More stars means a bigger room and Internet access, for instance, is now a criteria for a three-star hotel.

"Guests will know that the star ranking is a guarantee of cleanliness and furnishings that are in good condition," said Michele Le Poutre, who helped elaborate the new criteria.

But Mark Watkins, president of a committee pushing for more modern French hotels, said the new rating system was already out of sync with that of other international destinations.

"En suite bathrooms are only compulsory for three-star hotels and you will have to go to a four-star to get international channels on television," he complained.

Watkins said the new rating system would benefit mostly hotel chains and that independent owners will have a tougher time satisfying the criteria.

Industry officials estimate that up to 10 billion euros will be spent by hotel owners in the coming years for renovation work that will allow them to keep their stars.

France draws tens of millions of visitors each year to its tourist attractions, cultural sites and world-class restaurants, but the global downturn has hit the hotel sector hard.

Major chains like Accor, Europe's biggest hotel group, have reported a plunge in sales as bookings slowed dramatically over the summer months with the loss of British and American tourists.

Under the new regulations, any hotel can choose to apply for the star rating, but there is a fee.

By Cecile Baraille

Source: AFP

Rwanda: For 2010, It's More Tourists And Millions in Revenue for Country

Rwanda's revenue from tourism is projected to hit $203 million next year.

Rwanda Development Board also said that the country expects another $200 million from foreign direct investment in the next year.

According to the deputy chief executive in charge of tourism and conservation at the Rwanda Development Board Chantal Rosette Rugamba, at least 820,000 visitors are expected by the end of 2010.

Ms Rugamba said this while unveiling John Gara as the new RDB boss.

Mr Gara replaces Joe Ritchie who is now an adviser to President Paul Kagame.

Figures presented indicate that during the first semester of this year the country attracted some 440,000 visitors, a 7 per cent rise over the same period last year.

The visitors generated over $92 million.

Officials also said that the country expects to attract some $11 million from bird tourism by 2012.

Bird tourism

There are about 700 species of birds in Rwanda of which 44 are indigenous to the country.

RDB anticipates that birding will contribute 10 per cent of Rwanda's tourism receipts by 2010.

"In the first half of 2009, 43 per cent or 189,857 of the visitors who came to Rwanda came for business purposes. We anticipate that conference tourism will continue to generate considerable revenue in 2010," Ms Rugamba said.

At the same ceremony, deputy chief executive in charge of business operations at RDB Clare Akamanzi said projected investments for 2010 were recorded at $200m for foreign direct investments.

According to RDB, nine investment projects worth $52.4 million (Rwf 26.2 billion) and able to generate 240 jobs were registered in November.

This represents an increase of 297 per cent from the $13.2 million (Rwf6.6 billion) registered in October 2009.

Ms Akamanzi termed delays in implementation of the planned investments as the biggest challenge this year.

Information availed indicates that in the first six months of this year, investments faced a decline of 10 per cent in the number of projects registered though there was a 50 per cent increase in value of investment projects registered.

According to the World Investment Report 2009, Rwanda registered a dramatic rise in investment inflows this year.

The report said the country attracted $16 million in 2006, $67 million in 2007 and $103 million last year.

For the third year running, Uganda led the East African region in attracting FDIs fetching $787 million in foreign investments in 2008, up from $733 million in 2007 and $644 million in 2006.

Despite the rise in foreign investments, some of Rwanda's biggest investment attractions were badly hit by the global financial crisis.

For instance, Dubai World, a major holding company owned by the United Arab Emirates earlier this year scaled down its investments in the country, preferring to concentrate on two projects out of a handful it had picked.

Almost two years ago, the Middle-East giant had announced that it was to line up an investment worth $230 million (Rwf130 billion) mainly in the hospitality industry with the building of a new 150-room hotel in Kigali on the Kigali Golf Course.

It also promised to re-develop the 18 hole golf course and the golf and country club, as well as building townhouses and villas.

Construction on the developments was meant to commence in late 2007 according to a statement quoting the Dubai World Chairman, Sultan Ahmed bin Sulayem.

However despite "prioritising" particular areas of investment there has not been any mention of commencement of construction since then.

However, two weeks ago RDB said it had not yet received any indication of change of strategy from the previous report that Dubai World had submitted.

RDB is currently being restructured. Mr Gara said the process will lead to a creation of clusters that will focus on policy advocacy in areas that promote the private sector and agriculture as a business industry.

RDB was created by a government's Organic Law to fast-track development and catalyse economic growth.

It is a merger of a number of agencies, including the investment, tourism and information and technology authorities.

By:  Kezio-Musoke

London hotels lead growth recovery in Europe

London is leading the field in the European hotel market while Barcelona rates have fallen by 20 per cent

London is leading the field in the European hotel market, driving room occupancy up in November together with an average room revenue increase of 2.7 per cent, according to latest figures from TRI Hospitality Consulting’s European Chain Hotels Market Review. Only London showed growth in average room revenues in Europe.

As a result, RevPAR (revenue per available room) in the UK capital increased by more than 11 per cent and profit per available room (GOP PAR) rose by 9.2 per cent to €113. This moves London significantly above other leading European cities such as Paris (€62.98) and Amsterdam (€59.44).

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.

But average room revenues across Europe continue to decline, compared to levels achieved last year, with the exception of London. Barcelona experienced the greatest decrease, with achieved average room rates dropping by almost 20 per cent to €115.27.

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

To view a sample report visit: http://www.trihc.com/Home.aspx?pID=149-0

It’s champagne time for the Indian hotel industry

Af ter braving recession and the terror attack crunch, the Indian hospitality industry has been one of the first sectors to recover. Hotels and restaurants in metros and tier I & II cities across the country have witnessed an increase in occupancy since August this year. Mumbai, where the worst ever terror attacks took place, hotels registered occupancy of as high as 65%. The industry expects complete recovery in the coming 12-18 months.

According to the world travel and tourism council, the annual growth in the hospitality industry is pegged at 15% with 2, 00,000 rooms (both luxury and budget) needed in the country and the segment is poised for a stupendous growth.

The World Tourism Organisation (WTO) also estimates that international tourist inflow in India by 2020 would reach 10 million with 6.5% growth for the next eleven years. This makes the country one of the fastest growing tourist destinations in the world, second only to China.

Initiatives like massive investment in hotel infrastructure and open sky policies made by the government are all aimed at propelling growth in the hospitality sector.

With the Commonwealth Games in 2010 and the Cricket World Cup in 2011, high influx of foreign tourists have ensured huge footfalls for the sector. Internal tourism too has, of late, begun offering great potential. Also, with the $23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities, thus signalling a boom-time for the hotel and hospitality segment.

Says, Anuj Prakash, general manager of Mumbai-based The Resort, “Hotel and hospitality industries are among the biggest employment generators in the country.
Towards propelling its growth, while the government should confer infrastructure status to the hotel industries, several taxation issues also need to be rationalised. Further permits and licences required for the hotel operations need to be rationalised by offering a 'single window' mechanism.”

Commonwealth Games 2010: A booster dose
The Commonwealth Games (CWG) would be a good opportunity to showcase “Atithi Devo Bhava,” the rich cultural heritage of the Indian hospitality to the international community, more so with the Union government aggressively promoting the Golden Triangle circuit – transport, tourism and culture.

In a bid to boost North India for the CWG, the parliamentary standing committee on transport, tourism and culture had recommended tax incentives for major hotels of Delhi, Jaipur and others like those applicable for hotels in the National Capital Region (NCR).

The standing committee report laid emphasis on the development of trains and airlines, especially international flights, and also for roping in the private sector for development of better tourist packages.

For high quality food and foodservice, the Food Safety and Standard Authority of India (FSSAI) has released a pilot project on “Safe Food and Tasty Food.” The pilot project aims at voluntary participation of food establishments of Delhi/NCR to ensure food safety and to upgrade the hygienic conditions of the eating establishments.

Union tourism minister Kumari Selja said Commonwealth Games had given an opportunity for showcasing India as a unique and hospitable tourism destination. It is expected that a large number of tourists would visit the country next year, bringing back the buoyancy in the sector.

“The tourism ministry has been working towards developing adequate accommodation, sprucing up the tourism infrastructure and enhancing the quality of hospitality related services to make the visit a truly pleasurable and enriching experience for visitors during and after the CWG–2010. The goodwill generated through the successful organisation of this mega sporting event would enable a sustainable growth of tourism sector,” Selja said.

According to sources, the department of tourism has received hospitality project proposals under various categories of hotels, resorts and heritage hotels and camping sites for about 202 units in 2008 and 113 in 2009 across Rajasthan which are under various stages of completion.

Centre’s attempt and future projects
With themes like “Visit India Year – 2009” & “Incredible India” the tourism ministry made a fair attempt to tackle global economic slowdown which had cascading effect on the tourism sector and has adversely affected allied sectors including hospitality.

About the government’s activities to boost tourism & hospitality, Selja said that the tourism ministry had introduced a scheme called “Visit India Year – 2009” in close partnership with airlines, hotels and tour operators to attract visitors to India from different countries. “The promotional efforts in key source markets have been enhanced through important global events, road shows and outdoor advertising campaigns. The Central government is also making conscious efforts to develop emerging short and medium haul markets,” Selja added.

Additionally, the government decision to substantially upgrade over 28 regional airports in smaller towns, privatisation and expansion of Delhi and Mumbai airports, has improved the business prospects of hotel industry in India. Also, the upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India. Couple this with the availability of qualified human resources and the hospitality sector has already got great growth prospects.

“Increased competition and increase in demand has consolidated the hospitality segment, whilst opening up a plethora of opportunities but at the same time there are various constraints to continue. The high cost of land, high taxes and the additional taxes such as value added tax and service tax, tax holidays to specific hotels hamper the growth of the hospitality industry,” Oscar Fernandes, CEO – India, Bohemian Crystal Co. India (BCC) told Food & Beverage News.

BCC India represents some of the finest hotel equipment brands like Bauscher, Revol, Tafelstern and Zwiesel. The company is one of the leading providers of hotel glassware, crockery and other services to the hospitality sector.

“Fierce competition has led to innovative ideas by hotel majors, thereby delivering impressive hospitality products and services. This has, in turn, also prompted them to generate new lines of revenue with creative approaches, be it by reducing transaction costs, increasing productivity or promoting traditional Indian values,” Fernandes added.

Further the industry also seeks revised tax service which can promote investor to foray into hospitality particularly in plant and machine manufacturing for hotels & restaurants. According to Rohit Mathur, director – Bond the Fun Bar, the hospitality sector in India has tremendous growth opportunities however there are changes required in the rules and regulations to provide momentum of growth. The government should look for abolition of tax service on tour packages which will help push tourism in the country. A uniform tax structure for rooms and food & beverage across the country is much required. In addition, an extension of tax holidays on a pan-India basis and not just limited to the NCR region is required.

“Section 32 of the IT Act should be amended to restore the depreciation rate to 20%. The additional depreciation applicable to “plant & machinery” under section 32 1 (ii a) should also be allowed to hotels that make heavy investments in plant and machinery,” Mathur urged.

Far-fetched forecast – Vision 2015
Hotels & restaurants have now become the integral part of the society. The upcoming trends in this sector is international companies entering India, kiosks and food courts becoming more popular as food joints, expansion of brands into smaller cities and newer locations, Indian companies making international forays, multi-cuisine outlets, and chef-led innovations into fusion cuisine.

Currently, there are over 1,10,000 hotel rooms in India. According to the tourism ministry, about 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 – to accommodate 350 million domestic travellers. Hotels in India have a shortage of 1, 50,000 rooms fuelling hotel room rates across India.

With tremendous pull of opportunity, India is a destination for hotel chains looking for growth. The world travel and tourism council data states, India ranks 18th in business travel and will be among the top 5 in this decade. Further, analysts estimate, demand is going to exceed supply by at least 100% over the next 2 years.

Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, hotel room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. The Indian hotel industry is eroding its competitiveness as a cost effective destination.

Indian hotels are adding over 80,000 quality rooms, currently in different stages of planning and development and should be ready by 2015. The Central government has also approved 300 hotel projects, nearly half of which are in the luxury range. The manpower requirement of the hotel industry will increase from 7 million in 2002 to 20 million by 2015.