European Chain Hotels Market Review - November 2010
Consistency is the key to London leading Europe
Consistent growth throughout the year has allowed London hoteliers to significantly exceed the headline performance levels of other European markets, according to the latest HotStats survey by TRI Hospitality Consulting. Whilst city markets such as Brussels, Barcelona and Vienna remain heavily reliant on individual market sectors, such as government and conference demand, London has benefited from its strong demand from a range of sectors,...
Consistent growth throughout the year has allowed London hoteliers to significantly exceed the headline performance levels of other European markets, according to the latest HotStats survey by TRI Hospitality Consulting.
Whilst city markets such as Brussels, Barcelona and Vienna remain heavily reliant on individual market sectors, such as government and conference demand, London has benefited from its strong demand from a range of sectors, which have subsequently enabled consistent growth in the last 12 months. As a result, four and fivestar hotels in London are currently achieving a Gross Operating Profit per Available Room (GOPPAR) of €135.82, a figure which is close to 70% higher than the profitability level in the second highest achieving European city, Amsterdam.
In addition, although the majority of European city markets in this sample have experienced a greater level of profitability growth than London in the 11 months to November 2010, the UK capital is the only city which has a year-to-date GOPPAR of more than €100, due to its rapid recovery from the impact of the recession, which began in earnest one year ago.
In addition to the strong revenue performance, London hoteliers have successfully maintained a lean workforce throughout the year so far, with payroll costs accounting for just 23.1% of total revenue. Whilst payroll costs in other European city markets are significantly above this, Paris (38.9%), Madrid (40%) and Rome (40.6%) in particular.
As a result, year-to-date profit conversion at London hotels is approximately 50% of total revenue, which compares to a profitability conversion of approximately 32% in Paris, 29% in Madrid and 25% in Rome.
“Although other city markets are beginning to build their business back up to pre-recession levels, hoteliers in London have been there for some time. The UK capital benefits from a strong business mix driving revenues and astute management controlling costs and, at present, is clearly the most profitable hotel market in Europe,” said David Bailey, deputy managing director, TRI Hospitality Consulting.