Mediterranean cities seem to be attracting more visitors this summer. The HotStats European Chain Hotels Market Review for June found that both Barcelona and Milan reported growth in gross operating profit per available room of 8.5 percent and 4.1 percent, respectively.
Throughout the month, Barcelona hotels increased average room rate by 8.8 percent, but at the expense of occupancy, which declined by 4.6 percentage points, delivering a RevPAR rise of 3.3 percent. Additional increases were reported in RevPAR derived from meeting room rental (+40.4 percent), beverage (+9.3 percent) and food (+5.2 percent), which further boosted TRevPAR levels by 6.4 percent. Astute operating cost control enhanced departmental operating profit per available room (DOPPAR) by 8.3 percent despite a 1.7 percentage point increase in payroll. Overheads per available room climbed by 7.7 percent mostly due to sales and marketing costs increasing by 32.3 percent but that was not enough to temper the GOPPAR growth of 8.5 percent.
Hotels in Milan increased RevPAR by 2.9 percent driven by a 2.6 percentage point rise in demand in June. Mixed performances were registered in ancillary departments leading to a TRevPAR growth of 2.0 percent. A 3.9 percentage point increase in food and beverage profit conversion to 26.3 percent contributed to the DOPPAR uplift of 2.9 percent. Despite overheads per available room rising (+1.3 percent), payroll remained virtually flat and GOPPAR increased by 4.1 percent, representing a profit conversion of 33.0 percent for the month of June.
A Blip for Cologne and Dusseldorf
Other cities fared somewhat less well in June: Cologne hoteliers were hit by a major slowdown throughout the month with negative year-on-year comparisons across all key performance indicators. Both occupancy and ARR declined, by 5.4 percentage points and 2.3 percent respectively, leading to a RevPAR fall of 9.6 percent. A general decrease in revenue from other departments further impacted TRevPAR levels (-12.6 percent) and rising operating costs resulted in a DOPPAR reduction of 19.9 percent. Despite overheads declining, payroll increased by 4.4 percentage points contributing to deliver the GOPPAR drop of 29.0 percent.
On-going strong performances from Dusseldorf hoteliers since the beginning of the year were halted in June, with the city also experiencing negative year-on-year movements across all key performance indicators. A combined decrease in occupancy (-0.3 percentage points) and ARR (-1.2 percent) resulted in a RevPAR drop of 1.7 percent. However, positive movements in non-rooms departments softened the TRevPAR decline of 1.1 percent. Despite overheads per available room remaining flat, rising operating costs and payroll negatively impacted DOPPAR by 5.7 percent and GOPPAR by 8.9 percent.
Flat Revenue but Profit Growth for Warsaw
In June, Warsaw hotels recorded a 1.0 percentage point increase in occupancy which was cancelled out by a drop of 1.3 percent in ARR, and as a result RevPAR remained almost unchanged (-0.1 percent). Mixed revenue performances per available room derived from food (+4.6 percent), beverage (+0.4 percent) and meeting room hire (-20.3 percent) maintained TRevPAR at the same level (+0.1 percent) compared to the same period last year. However, proficient cost control and payroll management generated gains in DOPPAR and GOPPAR by 0.3 percent and 1.7 percent respectively.
Mixed Bag for the UK
In the UK, London’s hotel profitability fell for the second consecutive month in June, the UK Provinces continued to show year-on-year positive movement for gross operating profit per available room and in particular, East Midlands’ hoteliers experienced a 3.3 percent growth in this metric.
East Midlands hotels recorded a combined surge in occupancy of 1.1 percentage points and growth in average room rate of 1.6 percent resulting in an increase in rooms revenue per available room of 3.1 percent to £45.92. With non-rooms departments also pushing ahead, total revenue per available room went up by 1.4 percent to £88.94, representing the 17th consecutive year-on-year growth for this metric. Departmental operating profit per available room rose by 2.5 percent and despite payroll and overheads per available room increasing by 0.5 percentage points and by 1.5 percent respectively, GOPPAR surged by 3.3 percent to £27.07.
Liverpool hoteliers, meanwhile, saw improving trading conditions with increases in GOPPAR of 5.1 percent for the rolling 12 months to June, 9.0 percent for the first semester and 13.2 percent in June.
In June, this profit performance was supported by a 10.5 percent uplift in RevPAR thanks to a coupled rise in occupancy of 4.3 percentage points and in ARR of 4.4 percent. Positive movements were recorded in ancillary departments and TRevPAR levels increased by 8.3 percent to £93.68. Efficient operating cost control helped to deliver an 8.0 percent surge in DOPPAR, while payroll also declined by 0.9 percentage points. Despite a slight increase in overheads per available room (+0.7 percent), hoteliers managed to increase their gross profit conversion from 34.7 percent to 36.2 percent this month.