As Paris recovers, Rome's hotels struggle to boost revenue

Photo credit: iStock / Getty Images Plus / PocholoCalapre

Hotels in Europe recorded a 7-percent increase in profit per room in December, which wrapped up a positive year of performance for hotels in the region, according to the latest analysis of full-service hotels from HotStats.

Properties across the region recorded a 0.4-percent increase in room occupancy to 59.8 percent, as well as a 4.2 percent increase in achieved average room rate, to €145.26, which contributed to the 4.9-percent year-on-year increase in RevPAR to €86.87. 

Despite room occupancy levels in December being well below the annual performance, hotels in Europe recorded increases in achieved average rate across a number of segments, including residential conference (+3.8 percent), corporate (+9.4 percent) and individual leisure (+6.7 percent).

Virtual Event

Hotel Optimization Part 3 | January 27, 2021

With 2020 behind us and widespread vaccine distribution on the horizon, the second half of the new year is looking up, but for Q1 (and most likely well into Q2) we’re very much still in the thick of what has undeniably been the lowest point of the pandemic. What can you be doing now to power through and set yourself up for a prosperous 2021 and beyond? Join us at Part 3 of Hotel Optimization – A Virtual Event on January 27 from 10am – 1:05pm ET for expert panels focused on getting you back to profitability.

Paris in December

In line with the positive performance of the European hotel market, just over two years after the terrorist attacks that “rocked” the French capital, hotels in Paris have recovered well and are once again one of the top markets in the region. 

The recovery in the performance of hotels in the French capital has been led by a return to the volume of business and leisure visitors to the city, which this month was illustrated by the 6.4-percent increase in room occupancy to 63.5 percent. 

In addition, achieved average room rates at hotels in the French capital remain among the highest in Europe, reaching €350.66 in December, further to a 5.1-percent year-on-year increase. As a result, RevPAR at hotels in Paris increased 16.7 percent this month, to €222.51. 

“Following a short period of uncertainty after the terrorist attacks in November 2015, Paris has reclaimed its position as a global hub, illustrated by the buzz in the French capital this month,” Pablo Alonso, CEO of HotStats, said in a statement. “This was not only due to the visitation of more than 50 world leaders for the One Planet Climate Summit, but also due to the recovery in the leisure segment, with Paris re-establishing its profile as an extremely popular Christmas destination.”    

The Eternal City

In contrast to the performance of hotels in Paris, it was a tough end to a frustrating year for hotels in Rome, as revenue and profit levels fell away.  
While hotels in the Italian capital were able to record a 7.8-percent increase in achieved average room rate in December to €193.72, it was completely wiped out by a 7.3-percentage point decline in room occupancy to 46.1 percent. As a result, RevPAR at hotels in Rome fell 7 percent year-on-year to €89.32. 

In addition to declining revenue levels, profit levels were further hit by increasing costs, which were led by a 6.6-percentage point increase in Payroll, to 54.8 percent of total revenue. As a result, GOPPAR at hotels in Rome fell 27.4 percent in December to just €7.72. This is equivalent to a profit conversion of only 5.1 percent of total revenue.  

“The Rome hotel market is heavily reliant on the leisure segment, which typically falls away during December, which always leaves revenue levels floundering. However, owners and operators in the Italian capital will be disappointed that rising costs have almost entirely wiped out profit levels this month,” Alonso said.