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Making money and keeping it: Profits surge at European hotels

Making money and keeping it: Profits surge at European hotels

Hotels in Mainland Europe are generating revenue and keeping more of it. After what’s been a rather bruising year on the profit side, November marked the third consecutive month of year-over-year GOPPAR gains for hotels in the region.

GOPPAR was up 4.8% in the month over the same time last year, but is still down 1.3% year-to date, indicative of a previously listless profit performance, despite RevPAR that is up 1.2% YTD.

In November, RevPAR was up 4.2% YOY, buoyed by a 1.9% increase in average rate and a 1.6-percentage-point uptick in occupancy to 72.5%. In addition to gains on the rooms side, total F&B revenue on a per-available-room basis was up 1.3%, while Conference & Banqueting revenue on a PAR basis was up 1.2% YOY. It all led to a 3.0% increase in total revenue, which is now up 0.4% YTD.

Despite strong revenue results, GOPPAR could have, in fact, been higher if not for some escalating expenses. Labour costs on a per-available-room basis were up 2.0% in the month, but down 0.4% as a percentage of total revenue, noting the strength of revenue in the month. Total overhead costs were up 2.6% YOY. The largest expense jump was in Admin. & General, up 10.7% YOY.

 

Profit & Loss Performance Indicators – Mainland Europe (in EUR)

KPI November 2019 v. November 2018
RevPAR +4.2% to €109.23
TRevPAR +3.0% to €171.71
Payroll +2.0% to €52.08
GOPPAR +4.8% to €54.68

 

November is the start of the new opera season in Italy with Milan home to possibly the world’s most famous opera house, La Scala. November hotel data for Milan was as mellifluous as a high soprano. RevPAR was up 10.1% in the month versus the same time last year, bolstered by a 6.2% jump in average room rate. TRevPAR for the month was up 7.7%.

The growth in revenue led to a robust 26.1% YOY leap in GOPPAR, which was further aided by a 1.5% YOY decrease in both total overhead costs and labour costs on a per-available-room basis.

 

Profit & Loss Performance Indicators – Milan (in EUR)


KPI November 2019 v. November 2018
RevPAR +10.1% to €169.67
TRevPAR +7.7% to €269.80
Payroll -1.5% to €95.70
GOPPAR +26.1% to €85.02

 

Moscow did not have the same YOY swells as Milan, but still eked out profit gains amid negative revenue returns.

RevPAR for Russia’s capital was down 0.2% in the month versus the same time last year, the product of a 1.4% dip in average room rate. Occupancy was up 0.9 percentage points to 76.7%. The decrease in RevPAR, mixed with declines in F&B RevPAR and Conference & Banqueting, led to a 0.9% YOY decrease in TRevPAR.

Despite the revenue reduction, Moscow still recorded a 0.4% increase in GOPPAR, due, in part, to cost control. Labour costs on a per-available-room basis were down 2.5% YOY (down 0.5% as a percentage of total revenue to 25.6%), while utility costs were down 1.1% YOY. Total overhead costs were still up 1.3% YOY.

Profit margin was up in the month 0.5 percentage points to 42.6%.

 

Profit & Loss Performance Indicators – Moscow (in EUR)

KPI November 2019 v. November 2018
RevPAR -0.2% to €75.57
TRevPAR -0.9% to €120.51
Payroll -2.5% to €30.90
GOPPAR +0.4% to €51.40