European Chain Hotels Market Review released
LONDON, England - HotStats released July 2016 European Chain Hotels Market Review today. Profit Levels at Berlin Hotels Hit by Creeping Costs
LONDON, England – HotStats released July 2016 European Chain Hotels Market Review today.
Profit Levels at Berlin Hotels Hit by Creeping Costs
Whilst total revenue levels at Berlin hotels fell by 8.3% this month, creeping costs in the German capital contributed to an 18.8% year-on-year drop in profit, according to the latest data from HotStats.
Despite a packed summer schedule in the city, which included the six-day Classic Open Air Festival and Berlin Fashion Week, occupancy for Berlin hotels fell by 5.0 percentage points year-on-year to 80.1%, which in addition to a 2.6% decline in achieved average room rate, contributed to an 8.4% year-on-year decline in RevPAR (Revenue per Available Room).
And with declining revenue levels recorded in ancillary departments, including Food and Beverage (-6.6%) and Conference and Banqueting (-2.3%), Berlin hotels suffered an 8.3% decrease in TrevPAR (Total Revenue per Available Room) to €139.59.
Despite successfully reducing costs on a per available room basis, hotels in Berlin suffered increases in both payroll (+1.8 percentage points) and overheads (+0.6 percentage points) as a percentage of total revenue.
As a result of the movement in revenue and costs, profit conversion at Berlin hotels fell to just 21.5% of total revenue this month. This is a trend that Berlin hotels have been struggling with throughout 2016, as despite RevPAR declining by just 0.6% year-to-date, to €106.71, profit per room has fallen by 3.1% to €47.25 on a per available room basis.
Rate Gain Fails to Offset Occupancy Decline as Profit Drops at Madrid Hotels
In contrast to most months for year-to-date 2016, the increase in achieved average room rate at hotels in Madrid in July was not sufficient to offset the drop in room occupancy, which contributed to a 10.2% decline in profit per room for the month.
Year-to-date 2016, Madrid hotels have been able to strategically drive price at the expense of volume, in order to achieve a 1.9% increase in RevPAR, to €101.14. In turn, this has contributed to a 1.2% year-on-year increase in TrevPAR to €147.68.
However, this month the 3.0% decline in RevPAR was accompanied by a drop in ancillary revenues, including Food and Beverage (-12.2%) and Conference and Banqueting (-31.4%), which led to a 5.2% drop in TrevPAR.
As a result of the decline in revenue and increasing costs, year-on-year profit per room for the month fell by 10.2%. However, this was not sufficient to damage year-to-date 2016 performance, with hotels in Madrid recording a 5.0% increase in GOPPAR (Gross Operating Profit per Available Room) to €48.79.
Rising Costs Challenging Ancillary Department Profit for Prague Hoteliers
Despite hotels in Prague achieving a year-on-year GOPPAR increase of 1.9% in July, the increase was almost entirely due to growth in the Rooms department as significant profit declines were recorded in the Food and Beverage (-20.0%) and Leisure (-21.9%) departments.
Hotels in Prague successfully recorded a 2.3% increase in RevPAR for July, to €76.34, as a 0.9 percentage point decline in occupancy was offset by a 3.3% increase in achieved average room rate, which contributed to a 2.2% increase in Rooms department profit per room.
However, an 8.3% year-on-year decline in revenue in the Food & Beverage department was further exacerbated by an increase in both cost of sales (+29.6%) and payroll (+7.5%), which contributed to the 20.0% year-on-year decline in departmental profit.
The picture for the leisure department was even more challenging, with a 31.3% increase in revenue cancelled out entirely by an increase in cost of sales (+14.3%) and payroll (+121.4%), which contributed to the 21.9% drop in Leisure department profit per room.