Europe hotels start Q4 with profit growth: HotStats

DoubleTree by Hilton Lisbon, Fontana Park
Hotels in Lisbon, Portugal, like the DoubleTree by Hilton Lisbon, Fontana Park, reported “great” results in October. Photo credit: Hilton

Mainland Europe hoteliers reported a positive start to the last quarter of 2019. October marked the second consecutive month—and third month of the year—of growth in profit per available room compared to the same period last year, according to the latest data from HotStats.
 
A strong top line drove the 1.2 percent year-over-year increase in gross operating profit per available room. In the rooms department, a combination of occupancy (up 1 percentage point year over year) and average rate (up 0.1 percent year over year) led to a 1.5 percent increase in revenue per available room.
 
This positive trend was replicated across other revenue centers. Specifically, food-and-beverage revenue, which achieved 1 percent year-over-year growth on a per-available-room basis, while conference and banqueting increased 1.2 percent year over year. Consequently, October 2019 total revenue per available room was 1.9 percent higher than the same month of last year.
 
Expenses also grew in October. Labor costs per available room climbed 1.7 percent while overheads surged by 3.2 percent year over year. Because of this flow-through erosion, year-to-date 2019 profit per available room is still 1.7 percent below its 2018 counterpart.
 
Profit conversion in mainland Europe was recorded at 40.1 percent of total revenue.

Lisbon

Lisbon, Portugal, saw “great” results in October, HotStats analysts said, recording an increase in profit per available room for the sixth time this year. This 21.8 percent year-over-year growth in gross operating profit per available room marks the fourth double-digit profit boost in 2019 for the Portuguese capital.
 
RevPAR in the rooms department achieved a 15.5 percent increase, fueled by a 5.8 year-over-year percentage point surge in occupancy and a 7.6 percent year over year rise in average rate. Ancillary revenue also expanded during this period, led by F&B (up 25.1 percent year over year) and conference and banqueting (up 48.4 percent year over year). As a result, total revenue per available room placed 18.0 percent above the same month of last year.
 
Labor costs and overheads moved in the same direction as revenue, recording year-over-year increases of 10.6 percent and 14.1 percent, respectively and on a per-available-room basis. Despite this, year-to-date profit per available room is 11.8 percent higher in 2019 than it was in the previous year.
 
Profit conversion in Lisbon was recorded at 47.3 percent of total revenue.

Vienna

The month wasn’t nearly as good for Vienna, Austria, hoteliers, who reported their greatest decline in profit per available room of the year. GOPPAR in the city fell 30.9 percent year over year, its second consecutive double-digit drop in 2019.
 
The fourth quarter did not start off strong: Occupancy (down 8.8 percentage points) recorded its deepest 2019 year-over-year plunge and average rate (down 7.3 percent year over year) fell for the first time since May 2018. This resulted in what HotStats analysts called a “staggering” 16.8 percent year-over-year contraction of RevPAR.

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Poor revenue results in F&B (down 19.3 percent year over year) and conference and banqueting (down 32.0 percent year over year) pulled down ancillary revenue, which decreased 16.5 percent year over year. As such, total RevPAR fell 16.7 percent year over year.

Hoteliers in Vienna did manage to control costs, however. Labor costs per available room decreased by 5 percent year over year and overheads declined by 3.4 percent. As a result, year-to-date 2019 GOPPAR is still 4.2 percent higher than the same period of last year.
 
Profit conversion in Vienna was recorded at 31.2 percent of total revenue.

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