HotStats European report takes aim at Dublin, Istanbul and Frankfurt

According to JLL's Irish Hotel Update, Irish hotels bought 20 percent of Ireland's total commercial property in 2016 while Dublin ranks first in occupancy.

With Europe in a state of political flux, it should be no surprise that the latest data from HotStats indicate a decidedly mixed bag for hotels in three profiled cities. Dublin is soaring—for now—Istanbul is struggling and Frankfurt is finding new ways to adjust to a new normal. 

Profits still growing at Dublin hotels

First, some positive numbers. Dublin had a great 2016, and while year-on-year growth in profit per room at Dublin hotels slowed to 4.5 percent for year-to-date 2017, the city's hotels are still seeing "remarkable" growth in top- and bottom-line performance.  

Dublin's profit growth grew by 30.1-percent in 2015 and 19.9 percent in 2016, so while the year-to-date growth is more subdued right now, it is still among the fastest-growing in Europe.

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Room occupancy at Dublin hotels dropped by 2.3 percentage points this month, but this was balanced by the 6.9-percent increase in achieved ADR to €144.84. As a result, the upward trajectory of RevPAR for hotels in Dublin was maintained, with a 3.7-percent increase for the month contributing to a 3.8-percent year-to-date increase for 2017 to €100.75.

Looking ahead, HotStats predicts that Dublin's hotels will have to fight to maintain top-line performance, as the city is poised to get at least 18 new hotels over the next three years with 1,610 bedrooms. (Among these are the 202-guestroom Aloft Dublin City and the 178-guestroom Clayton Hotel Charlemont.)

For now, the growth in top- and bottom-line performance remains considerable, with a 48.6-percent increase in RevPAR recorded over the last 36 months, fueling a 77.5-percent increase in profit per room, to €79.40 in the 12 months to February 2017. 

Istanbul hotels see profit fall to negative numbers

Turkey, meanwhile, is another story. Hotels in Istanbul recorded a profit-per-room of -€2.71 in February, as year-on-year profit levels dropped by 50.6 percent this month, led by a 14.8-percent drop in RevPAR to €30.55.

The RevPAR drop was due to a 4.2-percentage point decrease in room occupancy, to just 39.7 percent, as well as a 5.9 percent decline in achieved average room rate, to €77.03.

As we noted earlier this week, last year’s attempted military coup forced the declaration of a state of emergency, deterring travel to the region. In June, the Ministry of Tourism & Culture reported a 41-percent fall in international arrivals. According to the latest provisional data from the country’s Ministry of Tourism & Culture, the number of foreign arrivals between January-February 2017 was 2.2 million, a 8.12-percent decline from the previous year. 

The commercial segment has been the hardest hit in recent years, with the residential conference and corporate segments comprising 38.6 percent of accommodated roomnights in the 12 months to February 2017, a major drop from 51.7 percent in the 12 months to February 2014. For the average hotel polled in HotStats' sample for Istanbul, the decline is equivalent to a drop of approximately 15,000 accommodated commercial-related roomnights per year over the last 36 months.

The recent poor performance means there is little room for further cost-cutting. At the same time, payroll levels at hotels in Istanbul increased by a further 0.9 percentage points to 57.4 percent of total revenue, wiping out more than half of hotel profits. The remaining revenues were hit by overhead costs, which accounted for 48.5 percent of total revenue.

Non-rooms revenue drives profit growth in Frankfurt 

Despite hotels in Frankfurt virtually flatlining in RevPAR this month, hotels in the German city recorded a 3.7-percent increase in profit per room thanks to growth in non-rooms revenue.

Hotels in Frankfurt posted a 0.4-percentage point increase in occupancy, but this was almost completely wiped out by a 0.4-percent decline in achieved average room rate to €158.42.

However, the 0.1-percent increase in rooms revenue at Frankfurt hotels was supplemented by growth in non-rooms revenue, including F&B (+5.3 percent) and conference & banqueting (+8.7 percent), which contributed to the 1.6-percent increase in TrevPAR (Total Revenue per Available Room).

And despite a 2.1-percent increase in payroll per available room, a 0.6-percent saving in overheads on a per-available-room basis contributed to profit-per-room increasing to €56.49, equivalent to a profit conversion of 34.6 percent of total revenue.

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