Market Reports

European Chain Hotels Market Review - February 2019

Despite slight upticks in RevPAR and TRevPAR, profit per room at hotels in mainland Europe fell in February, unmasking flow-through challenges, according to the latest data tracking full-service hotels from HotStats.
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Profit Slide Exposes Flow-Through Deficiency in European Hotels

HotStats

Despite slight upticks in RevPAR and TRevPAR, profit per room at hotels in mainland Europe fell in February, unmasking flow-through challenges, according to the latest data tracking full-service hotels from HotStats.

It’s an ongoing concern that stretches back to last year. The 4.1-percent YOY drop in GOPPAR is the third consecutive month the KPI has declined and follows a January YOY decrease of 9.7 percent.  

RevPAR ticked slightly upward 0.9 percent, fuelled by a 2.2-percent increase in achieved average room rate to €143.14. YOY occupancy fell by 0.8 percentage points to 62.2 percent.

Falling ancillary revenues in February included declines in food & beverage, which was down 0.8 percent YOY, and was accompanied by a 6.2-percent YOY jump in food cost of sales on a per-available-room basis.

TRevPAR increased a faint 0.1 percent to €138.26 and although this was more than €10 above the TRevPAR recorded in January, it remained almost €40 below the 12 months to February 2019 at €175.37.

Profit & Loss Key Performance Indicators – Mainland Europe (in EUR)

February 2019 v. February 2018

RevPAR: +0.9% to €88.98

TRevPAR: +0.1% to €138.26

Payroll % of Total Revenue: +0.5 pts. to 41.8%

GOPPAR: -4.1% to €29.45

The meagre growth in total revenue was wiped out by rising costs, which included a 0.5-percentage-point increase in payroll levels as a percentage of total revenue to 41.8 percent, as well as a 0.5-percentage-point increase in overheads as a percentage of total revenue to 28.6 percent.

As a result, profit contribution was recorded at just 21.3 percent of total revenue. Furthermore, flow through for the month was recorded at -781 percent, illustrating the challenges of rising costs against static revenues in the region.

“Since late 2016, RevPAR and TRevPAR have made healthy month-over-month advances, but are now flattening, and even turning negative in some instances. Hoteliers are having issue growing revenues high enough to contain mounting costs, resulting in slight to negative profit,” said Michael Grove, Director of Intelligence and Customer Solutions, EMEA, at HotStats. “

The impact of rising costs outpacing revenue growth were no better illustrated than in Barcelona, where hotels suffered a 14.7-percent YOY decline in GOPPAR to €97.11; this despite a 2.0-percent increase in RevPAR to €167.01.

Profit & Loss Key Performance Indicators – Barcelona (in EUR)

February 2019 v. February 2018

RevPAR: +2.0% to €167.01

TrevPAR: -5.1% to €259.95

Payroll % of Total Revenue: +2.9 pts. to 29.2%

GOPPAR: -14.7% to €97.11

As a result of movement in departmental revenues, TRevPAR fell by 5.1 percent to €259.95.

In addition, rising costs, which included a 5.6-percent increase in total hotel labour costs on a per-available-room basis, were a further pain point for hoteliers.  

In contrast, Berlin recorded a 16.6-percent increase in profit per room in February to €62.48, which was 13.5-percent above the GOPPAR recorded in the 12 months to February 2019 at €55.07.

Growth was led by an 8.6-percent increase in RevPAR to €125.70 and an even greater 11.3-percent rise in TRevPAR to €199.81.  

Thanks to a 1.0-percentage-point saving in payroll levels as a percentage of total revenue, hotels in Berlin recorded a profit contribution of 31.3 percent of total revenue in the month.

Profit & Loss Key Performance Indicators – Berlin (in EUR)

February 2019 v. February 2018

RevPAR: +8.6% to €125.70

TrevPAR: +11.3% to €199.81 

Payroll % of Total Revenue: -1.0 pts. to 32.0%

GOPPAR: +16.6% to €62.48

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Our unique profit and loss benchmarking service which enables monthly comparison of hotels’ performance against their competitors. It is distinguished by the fact that it provides in excess of 100 performance metric comparisons covering 70 areas of hotel revenue, cost, profit and statistics providing far deeper insight into the hotel operation than any other tool.

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