Source: HotStats

Paris Hotels Suffer Profit Drop in Wake of Terrorist Attacks

Year-on-year profit per room at full-service hotels in Paris dropped by 19.0% this month, as the terrorist attacks, which took place on 13 November, were the root cause of a substantial decline in demand for hotel accommodation, according to the latest data from HotStats.

November is typically a buoyant month of performance for hotels in Paris with occupancy levels in the mid to high 70s and strong achieved average room rates, but this year the events which took place in the French capital triggered a 10.6 percentage point decline in room occupancy, to 64.4% from 75.0% during the same period in 2014. A decline in visitor numbers in the wake of the attacks was predictable, as was the cancellation of major conferences and exhibitions as security concerns remained. The impact on visitors to the city is illustrated by the 17.5% decline in the number of accommodated leisure room nights recorded in our sample of 37 Parisian hotels, equivalent to a drop of more than 6,000 leisure room nights for the month.

However, the negative impact of the attacks on demand was somewhat offset as the world's media descended on the city in the aftermath of the events, which, in addition to the shift in demand sources, contributed to a 12.1% year-on-year increase in achieved average room rate, to €321.92. As a result, the RevPAR (Revenue per Available Room) decline for the month was managed at just -3.8%.

Reactive adjustments in costs helped to minimise the impact of the top line decline on profit. However, labour costs were recorded at 49.2% of total revenue for the month, against 46.9% in November 2014. As a result of the movement in revenue and costs, profit conversion at hotels in Paris declined to 16.7% of total revenue this month from 19.5% during the same period in 2014.

Big Events Boost Barcelona Hotels Profit for November

Hotels in Barcelona achieved a 16.0% increase in profit per room for the month of November, which was primarily as a result of the 12.6% uplift in RevPAR to €127.58, as the city's key conference and event facility, Fira Barcelona, hosted several major events.

The Microsoft Convergence EMEA 2015, Smart City Expo World Congress 2015 and the Gamification World Congress 2015, had a combined attendance of more than 20,000 delegates. Whilst these are all annual events, in addition to the Smart City Expo moving to November from September this year, the growth in their popularity has helped to fuel increases in demand enabling Barcelona hoteliers to leverage price, particularly in the Best Available Rate Segment in which the sector rate increased by 23.3% to €93.92.

The strong headline performance contributed to a 16.0% increase in GOPPAR (Gross Operating Profit per Available Room) for the month, to €95.13, with Barcelona hotels converting at a strong 43.2% of total revenue. Thanks, in part, to the strong performance this month, hotels in Barcelona are on course to achieve a GOP increase of more than 11.0% in 2015, which is further to the 6.4% increase in 2014.

Despite November being one of the slowest months of profit growth, at just +2.6% year-on-year, hotels in Prague have recorded a 22.0% increase in GOPPAR for the 11 months to November 2015, to €49.41 from €40.50. The growth in profit per room has primarily been as a result of a 16% increase in RevPAR, as hotels in the Czech capital have achieved growth in both volume and price.

In addition to the significant recent additions to supply now being absorbed, Prague hoteliers are benefiting from the strong current economic profile of the Czech Republic, with year-on-year GDP growth projected at more than 4.0%, as well as record inbound tourist numbers.

As a result, Prague hoteliers are shaping up to follow the 23.6% increase in GOPPAR in 2014 with a profit per room increase of more than 20.0% in 2015.

About HotStats

HotStats provides monthly P&L benchmarking and market insight for the global hotel industry, collecting monthly detailed financial data from more than 8,500 hotels worldwide and over 100 different brands and independent hotels. HotStats provides more than 550 different KPIs covering all operating revenues, payroll, expenses, cost of sales and departmental and total hotel profitability.

Sita Banigo
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HotStats Limited