Europe Chain Hotels Market Review | October 2007 | TRI Hospitality Reports
Rugby converts to profit in Paris The Rugby World Cup helped Paris’s chain hotels achieve a massive rise in profitability during October, according to the latest figures from TRI Hospitality Consulting’s European HotStats survey. Paris saw a sample of its chain hotels enjoy a 53.5 per cent rise in profits, as measured by income before fixed charges (IBFC) per available room.
Rugby converts to profit in Paris
The Rugby World Cup helped Paris’s chain hotels achieve a massive rise in profitability during October, according to the latest figures from TRI Hospitality Consulting’s European HotStats survey.
Paris saw a sample of its chain hotels enjoy a 53.5 per cent rise in profits, as measured by income before fixed charges (IBFC) per available room.
With five major games culminating in the final all taking place in Paris, hoteliers achieved the highest occupancy, rate and rooms revpar in our survey of 10 European cities, as well as pushing payroll costs down by the largest margin – a drop of 6.8 points to 28.6 per cent of total revenue.
“The Rugby World Cup allowed Parisian hoteliers to charge premium rates and pack their properties with visiting fans during three very busy weekends,” said David Bailey, director, TRI Hospitality Consulting.
The profit per available room achieved in Paris was greater than the revenue per available room in all of the cities in the survey, except for London and Moscow. Nevertheless, the French capital still came second in the profit ranking with IBFC PAR of Eu166.20. Moscow was in first place with an IBFC PAR of Eu190.68.
Munich shows continuous profit growth
After Paris and Moscow, the biggest increase in profitability was seen in Munich with IBFC PAR rising by 28.9 per cent to Eu85.68.
“Hoteliers benefited from Expo Real, a commercial property trade fair which attracted 23,800 visitors to the Bavarian capital in October. This represented a 13 per cent increase in visitors on 2006, and a 24 per cent the rise in overseas visitors. Germany’s Euro 2008 qualifying game against the Czech Republic also kept volume high,” said Bailey.
Munich’s hoteliers have put in a consistently strong performance this year. Whilst other German cities have understandably experienced a dip in revenue and profit after the boost provided by 2006’s FIFA World Cup, the Munich hotel market stands out in achieving incremental profit growth in both 2006 and 2007. In the ten months to October, IBFC PAR rose by 11.8 per cent to Eu54.51 in Munich compared to a slight dip of 0.5 per cent to Eu55.44 in Berlin, and a fall of 9.2 per cent to Eu40.57 in Hamburg.
More MICE business in Amsterdam
In absolute terms, Amsterdam was the fourth most profitable city in the survey, with IBFC PAR increasing by 18.1 per cent to Eu109.14. In addition the Dutch capital achieved the second highest average occupancy, up 2.2 points to 88.7 per cent.
“October is always a key month for MICE tourism, but our unique HotStats profit and loss performance survey shows that Amsterdam’s hotels had particularly strong demand for corporate and conference bookings. As a consequence, food and beverage department profit was up by 22 per cent to Eu18.92 per available room,” said Bailey.
In the ten months to October, Amsterdam, London and Paris were the only cities in the survey to achieve positive movement across all five performance measurements: occupancy, room rate, room revpar, payroll, and IBFC PAR.
Prague’s profit reaches its annual high
Elsewhere, Prague’s chain hotels had a good month in the context of an erratic performance so far this year. Positive occupancy and rate movement led to an 8.1 per cent increase in revpar to Eu131.90. With payroll costs accounting for just 17.6 per cent of total revenue (the second lowest in the survey after Moscow) profit conversion was robust with IBFC PAR up by 6.1 per cent to Eu106.70.
“Profit levels at Prague’s chain hotels have been going up and down like a yo-yo, with IBFC PAR as low as Eu22.93 at the start of the year before reaching a peak of Eu104.10 in May. With a marginal improvement in volume, Prague’s hoteliers did well to push up rate and achieve a healthy level of profit in October. If they can do the same again in November they will achieve two consecutive months of profit growth for the first time this year,” said Bailey.