Europe Hotels See Fall in Demand
24 July, 2008：Demand for hotel rooms fell in eight out of 10 European cities during the first six months of this year, according to a recent survey. Only hotels in Budapest and Paris saw a slight increase, while other cities were hit by falling visitor numbers from the UK and the US.
In Munich and Prague, the drop in demand hit average room rates; hotel chains in Munich, Prague and Warsaw reported a drop in profit growth, while in Amsterdam, Hamburg and London profits failed to keep pace with inflation.
According to the European HotStats survey from UK-based TRI Hospitality Consulting, Amsterdam saw the biggest fall in average occupancy rates, which were down by 4.6 percentage points.
TRI managing director Jonathan Langston said that, in spite of the falls in both occupancy levels and – in some cases – average room rates, European hotel performance was ‘reasonable’ with both room revenue and profit continuing to grow in most cities.
“Last year represented a high watermark for international travel and Europe enjoyed the lion’s share of arrivals,” he said. “The drops in average occupancy need to be seen in this context.”
Paris was the most profitable city for chain hotels in June, even though hoteliers reported lower operating profits than the previous year when the French capital hosted the biennial Paris Air Show.
Vienna, which co-host of the UEFA Euro 2008 football championships in June, came in second place. Chain hotels saw an 80% surge in gross operating profit during the tournament, when average room rates shot up more than 61% to €270.
As a result of the high prices, the average occupancy in the Austrian capital fell almost 10% to 72%, the lowest in the survey. “Vienna’s chain hoteliers played a winning tactical game, eschewing volume for revenue growth,” said Langstone. “The effect was outstanding.”
London was the third most profitable city, reporting a 3.3% increase in gross operating profit to €123.61 per available room.
Hamburg slipped to the bottom of the league following a 15.3% drop in operating profit per available room to €45.33. Although average occupancy only dipped 1.5 percentage points to 74.5%, average room rates dropped by 4.6% to €110.
“A combination of recent openings and refurbishments plus widespread discounting is putting pressure on rates in Hamburg,” said Langston.