European Chain Hotels Market Review - January 2018
Robust revenue growth and cost savings helped hotels in Europe record a 16.0% year-on-year increase in profit per room in January, signalling a very strong start to 2018, according to the latest worldwide poll of full-service hotels from HotStats.
The 5.8% year-on-year growth in RevPAR recorded by hotels in Europe in January, to €82.70, was due to a 1.4-percentage point increase in room occupancy, to 58.2%, as well as a 3.3% increase in average room rate, to €142.21.
The growth in both volume and price at hotels in the region spurred increases in in Non-Rooms Revenues, including Food & Beverage (+3.4%) and Conference & Banqueting (+4.6%) on a per available room basis, which contributed to the 4.9% increase in TrevPAR for the month, to €131.55.
Whilst hotels in Europe typically record a TrevPAR low in January, the uplift this period represents a ninth consecutive month of year-on-year Total Revenue growth for hotels in the region, suggesting its hoteliers are enjoying a purple patch of performance.
In addition to the growth in volume, average room rate in Europe was driven by increases in rate in the Corporate (+2.3%), Individual Leisure (+1.5%) and Group Leisure (+14.6%) segments, illustrating that the positive performance in the region is being supported by a broad base of demand.
Profit & Loss Key Performance Indicators – Europe (in EUR)
January 2018 v January 2017
RevPAR: +5.8% to €82.70
TrevPAR: +4.9% to €131.55
Payroll: -0.9 pts to 41.5%
GOPPAR: +16.0% to €29.42
As well as the increase in revenue, hotels in Europe successfully slashed costs, which included a 0.9-percentage point decrease in Payroll, to 41.5% of total revenue, fuelling a 16.0% year-on-year increase in GOPPAR to €29.42. This is equivalent to a profit conversion of 22.4% of total revenue.
Hotels in Vienna followed a similar trend to the region this month, albeit in spite of a lower recorded revenue, but with the benefit of much greater cost savings.
A 1.9% RevPAR increase, to €81.04, at hotels in Vienna was due to a 0.5-percentage point increase in room occupancy, to a lowly 55.4%, and supported by a 1.0% increase in achieved average room rate, to €146.35.
The increase in rate in January was achieved in spite of declining room rates in the Corporate (-2.6%) and Residential Conference (-6.8%) segments, but was driven by increases in the Individual Leisure (+0.8%) and Group Leisure (+4.3%) segment rates.
Profit & Loss Key Performance Indicators – Vienna (in EUR)
January 2018 v January 2017
RevPAR: +1.9% to €81.04
TrevPAR: +5.5% to €145.50
Payroll: -0.4 pts to 51.0%
GOPPAR: +46.6% to €12.46
“In line with the growth across Europe, hotels in Vienna have benefited from an uplift in demand from the leisure segments this month.
The investment by Vienna’s local government in cultural and tourist attractions in recent years has broadened the offering in the Austrian capital and generated a record number of bednights for the city, which swelled to 15.5 million in 2017.
This has been to the significant benefit of local hoteliers who have had a strong start to 2018 following the positive period of trading in 2017,” said Pablo Alonso, CEO of HotStats.
In addition to the 1.9% year-on-year growth in Rooms Revenue, hotels in Vienna benefit from a stronger contribution from Non-Rooms Revenues, which comprised 44.4% of total revenue in January, compared to 37.1% across Europe.
The strength of the growth in Non-Rooms Departments contributed to the 5.5% increase in TrevPAR this month, to €145.50.
Profit levels at hotels in Vienna were further boosted by cost savings, which included a 0.4-percentage point saving in Payroll to 51.0% and contributed to the 46.6% year-on-year increase in profit per room, to €12.46.
Despite the uplift in GOPPAR in January, profit conversion at hotels in Vienna remained comparatively low at just 8.6% of total revenue.
Hotels in Moscow also benefited from a strong start to the year, recording a 16.7% increase in profit per room, which was on the back of a robust increase in revenue levels, as well as cost savings.
The uplift in revenue at hotels in the Russian capital in January was driven by a 6.4-percentage point year-on-year increase in room occupancy, to 62.4%, which fuelled a 7.5% increase in RevPAR, to €56.20. The growth in Rooms Revenue was in spite of a 3.4% drop in achieved average room rate, to €90.09.
The growth in volume fuelled an increase in Non-Rooms Revenues at hotels in Moscow, illustrated by the 3.3% year-on-year increase in Food and Beverage Revenue, on a per available room basis, to €26.61, supporting a 6.2% increase in TrevPAR, to €87.50.
“Although Russia is well on the road to recovery following the recession which began in 2014 as a result of the rouble collapsing, the drop in crude oil prices and economic sanctions, demand remains resistant to price increases and top and bottom line growth at hotels in Moscow is being almost entirely driven by an increase in volume,” added Pablo.
Profit & Loss Key Performance Indicators – Moscow (in EUR)
January 2018 v January 2017
RevPAR: +7.5% to €56.20
TrevPAR: +6.2% to €87.50
Payroll: -1.3 pts to 35.0%
GOPPAR: +16.7% to €26.57
In addition to the growth in revenue levels, Moscow hoteliers managed to cut costs, which included a 1.3-percentage point reduction in Payroll levels, to 35.0% of total revenue.
This contributed to the increase in GOPPAR to €26.57, equivalent to a profit conversion of 30.3% of total revenue. Whilst this was well below the rolling 12-month average profit conversion for hotels in Moscow, at 44% of total revenue, it was one of the strongest profit conversions recorded in the region in January.
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