Vienna was expected to see some decline this year after benefiting in 2008 from the UEFA Euro 2008 soccer tournament. Revenue per available room (RevPAR) in Vienna went down 27.5% during the first half of this year. The main issue was dramatic discounting with average room rate down almost 20%.

The London hotel market achieved a strong occupancy level of 87%, a marginal increase of 0.3 percentage points over the performance in June 2008. Occupancy levels, however, were maintained at the expense of average room rate, which declined by 7.1%. According to David Bailey, deputy managing director, TRI Hospitality Consulting, “Whilst the London market experienced a decline of 7.1% in average room rate relative to June 2008, a room occupancy of 87% reflects the resilience of the market and its ability to tap into a range of demand segments”.

“With the summer holidays approaching and assuming we are luckier with the weather, it is likely that London will achieve a strong performance due to the continuing weakness of the pound, although the Swine Flu pandemic will inevitably impact”, said Bailey.

Of the 10 cities sampled, two others, Amsterdam and Brussels, also suffered a RevPAR drop of more than 20% in the six months to June 2009. One city performing comparatively well is Warsaw, with RevPAR dropping just 5.9%. However, Warsaw already had the lowest absolute RevPAR of any of the 10 cities.

In the month of June, the Paris hotel market achieved a room occupancy of 84.4% at an average room rate of €200.62. This resulted in a RevPAR of €169.38, representing a premium of around 22% over the London hotel market, the second highest RevPAR.

However, in terms of profit per available room (GOP PAR), Paris was outperformed by London. Bailey said: “The relatively low profit per available room achieved by the Paris hotel market despite a high RevPAR reflects significantly higher operating expenses. In particular payroll, as this accounted for 33.7% of total revenue in June 2009 in Paris compared with 22.3% in London”.

Amsterdam achieved broadly similar levels of RevPAR to London, albeit through a significantly higher average room rate of €176.05 at a lower occupancy level of 79.5%. Paris was the other market to achieve occupancy levels in excess of 80% and at 73.7%, occupancy levels in Munich were 6.4 percentage points below June 2008 levels.

Prague and Brussels Continue to Decline

Prague and Brussels were the only hotel markets to achieve occupancy levels of below 70% in June 2009. Additionally, both markets experienced declines of over 20% in terms of RevPAR.

According to Bailey, “Prague has experienced sharp declines in performance levels due to the double whammy of a significant increase in supply in recent years as well as several of its key feeder markets including Germany, the UK, the US and Italy being severely impacted by the recession, leading to a reduction in inbound tourism”.

Jonathan Langston
+44 (0)20 7892 2201
HotStats Limited

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