Industry Update
Editorial Article 1 February 2002

Europe's Hospitality Industry in 2001: France Is Doing Better Than Its European Neighbours (MKG Report)

Despite the events of 11 September that penalised the entire hospitality industry, this year France posts a new record with a RevPAR that has grown by +1.6%.

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MKG

Methodology: This survey was carried out using a sampling of 3,700 hotels that belong to corporate operated chains in Europe, representing 380,000 rooms. The data has been collected hotel by hotel, on a monthly basis. It has been organised according to the distribution by category of the supply of corporate operated chains and to the importance of each country in the European Union.

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France takes the lead
RevPAR France: +1.6% in 2001
RevPAR Europe: -2.9% in 2001

Southern Europe show the best outcome
France, Italy, Spain and Portugal produce the best results

Budget segments remain as strong as ever
Significant growth of the RevPAR in 0* / 1* / 2*

Only 4* sees a drop in the RevPAR
RevPAR 4* Europe: -6.8% in 2001

First results
Definitive figures will be published in the double February/March issue of H T R Eurotrends & Marketing, which will be available in March.

CUMULATED RESULTS ON 2001 FOR CORPORATE OPERATED HOTEL CHAINS, BY COUNTRY, ACROSS ALL CATEGORIES

CUMULATED RESULTS ON 2001 FOR CORPORATE OPERATED HOTEL CHAINS, BY CATEGORY - EUROPEAN UNION

  1. European Union Zone: a good first semester, a difficult second semester and, at the end, a fairly restrained drop for the RevPARDespite the events of 11 September, Europe's hotel industry shows a drop of only 2.9% for the year 2001. This drop is exclusively due to an average 2.8 point drop in the occupancy rate to 67.7%. In fact, the average daily rate grew by 1.1% in 2001 to 97.2 euros. The countries of the European Union had to face a series of events in 2001 that included an economic slump relatively early in the year and economic events (the BSE and foot and mouth disease crises in the United Kingdom). Nonetheless, in the end, Europe's hotel industry experienced a good first semester with cumulated growth for the RevPAR on 6 months of +4% at end June 2001. Thus, although 2001 closes with a negative score, the foundations are solid. A sign of good health is that the sector continues to merge: the year will have been marked by the closing of the purchase of the hotel pole of the group Compass as well as, in particular, the cession of the Le Méridien brand to Nomura, and that of Posthouse to Six Continents (ex-Bass Hotels & Resorts). Another emblematic buyout of the year is that of the Scandinavian leader Scandic by Hilton, which is clearly asserting itself in Northern Europe. It is still too soon draw up the results in terms of development, but 2001 may otherwise be characterised by significant growth in supply, revealing the favourable long term forecasts for the whole of the profession. Thus, the drop in occupancy rate needs to be interpreted with great caution because in certain instances (1* in France, for example), growth in supply more than compensates for the drop in the occupancy rate; in the end, the total number of rooms sold in 2001 is higher than that for 2000. In general, the budget categories had a year 2001 that was similar to previous years. This year, the RevPAR is once again showing growth and the average daily rates are clearly improving (in the region of +4/5%). Only 4* shows a drop in RevPar (-6.8%).
  2. France in the lead of European countriesSouthern Europe posts the best results in 2001. Spain, Italy, and above all France and Portugal post better results than other European countries. For all these countries, the drop in the RevPAR did not surpass -2.6%. In France, the indicator grew by +1.6% and in Portugal the increase reached +3.1%. This year, France, the number one tourist destination world wide (+2% for tourists in 2001 according to the Minister of tourism), confirmed its role as the destination country par excellence. The occupancy rate lost "only" 1.3 point, giving it the best performance in Europe. The average daily rate, on the other hand, is on the rise and its growth reached +3.5% (only Spain and Portugal did better in this area). Immediately following the events of 11 September, MKG Consulting forecasted growth in the RevPAR of +2 to +4% for 2001 in France. We thus came very close in our previsions. Many factors may explain France's good results. First of all France was less affected by the slump in the American economy (than Germany, for example). Then, aside from the "11 September after-shock" that hurt all European countries, France did not have to stand up to penalising external factors the way the United Kingdom did, for example, with foot and mouth disease. Another factor is that France differentiates itself from other European countries by the high number of budget categories (0*/1*/2*) in its national supply. Meanwhile, the budget categories were untouched by the events of 11 September (+4/5% for the RevPAR in 0*/1*/2*). Unaffected by the shake-ups and external factors, France's budget segments have posted progress with outstanding regularity for the past decade or so. Finally, in today's context, there is every reason to believe that a carryover of clientele (in both the tourist and business segments) from other areas in the Mediterranean (North Africa, and the Middle East towards Europe) took or will take place. France, like Italy or Spain, should thus be among the first to rise up.
  3. A year to forget for Great BritainGreat Britain posted a drop in its RevPAR by -6.5%, a figure that may almost be considered minimal in light of the extreme penalising factors the country was up against: following the BSE and foot and mouth disease crises, Great Britain, more than any other country in Europe, was affected by the events of 11 September. In London, in particular, 4* hotels posted record lows. The scarcity of American customers has had a heavy toll on results for British hotels because they are a significant part of the clientele mix. Nonetheless, the outlook remains good for this country as the good economic results show (the United Kingdom should post the best growth rate in terms of GDP in the European Union). Another sign of good health is the large development of the hotel supply that was over +8% at end 2000.
  4. A RevPAR down by -3% to -5% for Continental Europe and the BeneluxIn Germany, Austria, The Netherlands and Belgium, the drop in the RevPAR in 2001 falls between -3% and -5%. These countries all experienced a strong impact in the aftermath of 11 September and were affected by the drop in growth in the United States. There are a few particularities nonetheless: for The Netherlands and Belgium, the year 2000 (European football championship) was exceptional (+14.8% for the RevPAR in Belgium, +17.8% for the RevPAR in The Netherlands). It is thus logical that 2001 be slower. As far as Germany is concerned, the overall situation of the country should not hide the strong differences from region to region. In fact, while the RevPAR is looking at growth in Munich and Berlin (+4% and more), the figure is down in Hamburg and saw moderate growth in Frankfurt. Finally, Austria, once again, is among those countries with the worst results this year.
  5. The major cities were clearly affected by the events of 11 SeptemberEurope's major cities did not experience the best year ever. London saw the steepest slide (-10.4% for the RevPAR on the year). The downtrend is above all the result of a drop in the occupancy rate (-6.7 points to 75% on average!). Paris and Brussels also closed the year with a decline (-3.4% for the RevPAR in the two cities). In Paris, the occupancy rate is down by 4.8 points for the year (74.5%) and the average daily rate is up by 2.9%. Rome sings the same tune with a RevPAR down by about 2.5%. Two other capitals, however, post a RevPAR on the rise: Madrid (+1.4%) but above all Berlin (+7.4%). Berlin's results are not surprising. Since the city became Germany's new capital, it has been undergoing massive growth.

Although the conflict in Afghanistan is nearing its end, tourists nonetheless do not seem to be fully reassured. However, signs of recovery are evident. MKG Consulting forecasts recovery for Europe's hotel industry in the second semester 2002. The outlook for 2002, along with the main trends for the hotel industry, will be presented during the "6th annual meeting of the European hotel industry's decision makers, Marketing trends and strategies 2002" Monday, 11 March 2002 at the Maison des Centraliens*.

Contact
Georges Panayotis
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