Market Reports

European Chain Hotels Market Review - November 2012

Despite achieving a 39.9% year-on-year increase in profit per room led by increases in total revenue and savings in payroll, for the month of November hotels in the Greek capital recorded a GOPPAR (Gross Operating Profit per Available Room) of -€12.16, according to the latest HotStats survey by TRI Hospitality Consulting.

TRI Hospitality Consulting Despite achieving a 39.9% year-on-year increase in profit per room led by increases in total revenue and savings in payroll, for the month of November hotels in the Greek capital recorded a GOPPAR (Gross Operating Profit per Available Room) of -€12.16, according to the latest HotStats survey by TRI Hospitality Consulting. 

November has never been a particularly strong month for hotels in Athens, but room occupancy in this month has plummeted in recent years; from 51.1% in 2009, to 48.9% in 2010 and 38.9% in 2011.

Whilst volume for the month increased by 4.3 percentage points to 43.1% in November this year, it was undoubtedly as a result of significant compromises on achieved average room rate. Achieved rates are down across most sectors including non-discounted Best Available Rate (-10.6%), corporate (-17.6%), leisure (-12.3%) and groups/tours (-2.3%).

Despite the 3.4% decline in the achieved rate in in the Greek capital, at €138.77 hotels in Athens were positioned just below the top half of our European markets polled this month, ahead of Berlin (€110.03), Brussels (€133.44), Madrid (€116.89) and Warsaw (€91.17).

But the weak room occupancy left Greek hoteliers at the bottom of the pile in terms of RevPAR (Revenue per Available Room) at €59.86, which is compared to the top performance this month, London, at €163.18. 

 “The absence of positive governmental action is undoubtedly proving to be detrimental to the service economy throughout Greece, but more so in its capital city Athens, which has born the brunt of the ongoing anti-austerity action, which has often grown violent.

The disheartening situation for hoteliers in Athens is that there appears to be no resolution in sight to the problems they are facing,” said Jonathan Langston, managing director at TRI Hospitality Consulting.

Whilst hotels in Athens are better off than they were last year, with profit per room increasing by approximately 40%, GOPPAR for the month remains in negative territory at €-12.16 per available room.

In addition, payroll for hotels in the Greek capital for November was recorded at 54.5% of total revenue, which is clearly an unsustainable level.

Whilst November was a month of profit growth, financial year-to-date profit per room in Athens has decreased by 60.6% to just €10.44 from €26.53 during the same period in 2011. And this is from a high of €51.25 in the 11 months to November 2009.  

Performance is mixed as anti-austerity protests hit major European city markets

No other city polled this month is quite in the position of Athens, but performance levels across Europe have been mixed with the impact of austerity protests and strike action on business and transport prevalent in a number of the European markets polled, according to the latest HotStats survey. 

Madrid was highlighted as one of the cities worst hit by anti-austerity protests as unemployment in Spain is now at more than 25% and the violence which was broadcast to a global audience has undoubtedly impacted performance levels at the city’s hotels. Additionally, the disruption to transport is exemplified by more than 600 flights across Spain being cancelled. 

Profit per room for November declined by 14.8% as hoteliers in the Spanish capital city suffered a 2.4 percentage point drop in room occupancy and a 4.3% decrease in achieved average room rate, which contributed to the 7.5% decline in TrevPAR (Total Revenue per Available Room) to €119.80.

In Brussels, where protests were aimed at the European Commission, there was a decline recorded across all headline performance levels, which led to a 6% drop in profit per room to €44.08 from €46.88 during the same period in 2011. This was in stark contrast to the strong performance in Brussels in November 2011 as the city’s hoteliers accommodated Europe’s political leaders and their entourages throughout the economic crisis talks.

Even though the German capital also witnessed anti-austerity protests taking place in front of the Brandenburg Gate, the action remained peaceful and the city’s hoteliers fared well this month with increases across all headline performance measures. At an increase of 7.5%, Berlin was one of only four cities polled this month to achieve growth in profit per room in November, which is typically a tough month.

Whilst 40 unions from 23 countries were involved in the anti-austerity protests during November, for many European hotel markets it was business as usual.

Aside from Athens, the greatest margin of profit growth (8.5%) was achieved in Stockholm. And although the 3.7% increase in TrevPAR was a significant contributor to the year-on-year profit increase, it was also due to a 5.9 percentage point decline in payroll levels to 25.5% of total revenue from 31.3% during the same period in 2011. 

At €74.35, the profit per room in Sweden’s capital city was equivalent to a profit conversion of 42.9% of total revenue and was bettered only by London (49.5% of total revenue) and Moscow (43.4% of total revenue). 

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TRI Hospitality Consulting provides a wide range of services to clients in the hotel sector. It has offices in London, Dubai and Madrid.


For more information contact:

Jonathan Langston, managing director 020 7892 2201

jonathan.langston@trihc.com

David Bailey, deputy managing director 020 7892 2202

david.bailey@trihc.com

Charles Scudamore, director 0207 892 2211

charles.scudamore@trihc.com




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