PKF Report Reveals Growing Profitability In Hotel Industry Before 11 September
9 November 2001: The profitability of European hotels in the financial year to 31 March 2001 rose by 16% to Euro 20,098 per available room comparing favourably against Euro 17,952 in the Middle East and South Asia and Euro 17,062 in Africa. Occupancy, average room rate and rooms yield in Europe were also up on 1999 figures making the millennium year a propitious one for the hotel industry.
Sponsored by HSBC, PKF's Country Trends 2001 provides detailed
Commentary and analysis on the performance and profitability of over 1,100 hotels in 61 countries. It also offers a comprehensive reminder that the global hotel industry was in a good state less than a year ago and that, despite some of the doomsday scenarios being painted, travel will continue to play an integral part in modern society regardless of the risks involved.
Despite the strong picture of an increasingly profitable hotel industry in the year to March 2001, the authors acknowledge that the events of 11 September are likely to have a greater and more diverse impact on the industry than the Gulf War which precipitated the lowest point for global tourism in recent years. Hotel occupancies in major cities are already falling sharply and the uncertain economic climate is likely to have a negative impact on domestic hotel business.
Country Trends Key Findings Kuwait was top of the profitability rankings for the first time, with an increase of 10.0% in IBFC (income before fixed charges) per available room to Euro 37,628. Of the top ten most profitable countries, eight were in Europe.
|---------------+---------------+---------------+---------------+ +---------------| | | | | | | | | Country | Income before | % increase on | Country | Income before | % increase on | | | fixed charges | 99/00 | | fixed charges | 99/00 | | | (IBFC) per | | | (IBFC) per | | | | available | | | available | | | | room (ecus) | | | room (ecus) | | | | | | | | | |---------------+---------------+---------------+---------------+ +---------------| | | | | | | | | 1.Kuwait | 37,628 | 10.0 | 6. Poland | 26,123 | 3.2 | | | | | | | | |---------------+---------------+---------------+---------------+ +---------------| | | | | | | | | 2. Italy | 35,510 | 23.8 | 7. Egypt | 23,534 | 7.1 | | | | | | | | |---------------+---------------+---------------+---------------+ +---------------| | | | | | | | | 3. United | 28,494 | 13.3 | 8. France | 23,120 | 21.2 | | Kingdom | | | | | | | | | | | | | |---------------+---------------+---------------+---------------+ +---------------| | | | | | | | | 4. | 27,341 | 27.8 | 9. | 22,603 | 15.6 | | Netherlands | | | Switzerland | | | | | | | | | | |---------------+---------------+---------------+---------------+ +---------------| | | | | | | | | 5. Sweden | 26,668 | 23.9 | 10. Greece | 22,055 | 17.9 | | | | | | | | |---------------+---------------+---------------+---------------+ +---------------|
Top of the occupancy league were Sweden with 80.5% and the Netherlands(79.9%) who repeated their 1999/2000 positions. They were followed by the UK (76.0%), Switzerland (75.5%) and Greece (75.2%). Egypt, with a figure of 74.6%, was the only non-European country in the top ten. The five countries with the lowest occupancy rates were Russia and Kuwait with 46.0%, followed by Saudi Arabia with 52.1%, Pakistan (55.3%) and Oman (55.5%).
The rooms yield rankings were also dominated by European countries with Italy in pole position with a 17.1% increase to Euro 170.95. Kuwait was the only non-European country in the top ten with a 10.4% increase to Euro 102.04.
Melvin Gold, Managing Director of Hotel Consultancy Services at PKF, said: "Whilst our report shows considerable evidence of a vibrant and growing hotel industry in the year to 31 March, the impact of the US economic downturn had already started to affect major European cities before the watershed of 11 September. Global tourism has now been dealt a severe blow the impact of which can neither be fully foreseen or forecast in the current constantly changing situation. As hotels start to make redundancies and cut capex programmes, it is clear that there will be some consolidation in the industry and the jungle law of the survival of the fittest will prevail.
"However, we firmly believe that tourism and travel is increasingly becoming one of our 'inalienable rights', which will always involve some kind of risk, and are confident that the industry will bounce back although the new focus on security and safety will probably never be reversed."
Virginie Lannevere, HSBC, believes that the future for hotel operators will depend on their flexibility: "All operators will be faced by the same underlying negative trend in demand but it will be those who have superior property management and reservation systems, strong yield management, and the flexibility to cut their costs who will win through."
Country Trends 2001, Hotel performance and profitability in Europe, Middle East, Africa and South Asia is priced £500. Email:
For Further information:
- Christiane Morris PR Director, PKF 020 7782 9388
- Melissa Byrne PR Manager 020 7782 9380
- Melvin Gold Managing Director, hotel consultancy services, PKF 020 7831 7393