Another set of data-crunchers has found November was a month of solid profit growth for Europe’s hotels, with year-to-date GOPPAR 9.5 percent above the same period in 2017.
According to the latest data from HotStats tracking full-service hotels, demand from the commercial segment accounted for more than 40 percent of room nights sold in November, helping to fuel a 5.2-percent year-over-year increase in profit per room.
This was the 10th month of profit growth in 2018, with the only blip suffered in May and, unless December’s numbers offer some unexpected surprises, Europe’s hotels are set to record another huge profit increase in 2018, following the 8.9-percent increase in 2017.
Last year was "a hugely positive story for hotels in Europe with record revenue and profit levels being driven by volume, which continues to reach new heights,” said Michael Grove, HotStats' director of intelligence and customer solutions, EMEA, in a statement. “And this is all in spite of an increasingly challenging economic picture in the region.”
Profits and Cost Savings
Profit per room at hotels in Europe has now grown by almost 20 percent over the past 24 months to €64.57 in the rolling 12 months to November 2018, from €53.99 during the same period in 2015/2016, the report said.
Profit growth in the month was led by significant YOY increases in revenue, which included an uplift in rooms (up 5.6 percent) and food and beverage (up 1.4 percent) revenue, on a per-available-room basis; in spite of a decline in conference and banqueting (down 0.1 percent) and leisure (down 6.1 percent) revenue.
As a result, TRevPAR increased by 3.9 percent in November to €168.83. Growth in rooms revenue in the month was led by a 4.7-percent increase in achieved average room rate and supported by a 0.6-percentage-point increase in room occupancy.
In addition to accounting for more than 40 percent of demand, the commercial segment fueled the increase in average room rate and included a YOY uplift in both the residential conference (up 3.8 percent) and corporate (up 0.8 percent) segments.
The growth in revenue in Europe in November was supported by cost savings, which included a 0.2-percentage-point reduction in payroll to 35.5 percent of total revenue. Profit conversion was recorded at 31.1 percent of total revenue.
For hotels in Brussels, November was another month of good top- and bottom-line performance, as profit per room grew 25.1 percent YOY and hit a high for 2018 at €71.16. This was 47 percent above the GOPPAR levels for year-to-date 2018 at €48.51. Profit growth at hotels in the Belgian capital has now maintained an upward trajectory for the last 24 months, according to HotStats.
Year-over-year RevPAR growth in Brussels' hotels was led by occupancy improvements. Occupancy grew a healthy 5.7 percentage points to 81.6 percent, and a 3.7-percent increase in achieved average room rate to €161.68.
Since Brexit negotiations began 24 months ago, RevPAR levels at hotels in Brussels have increased by almost €30 to €110.13 in the rolling 12 months to November. During the same period, profit per room almost doubled to €46.71.
While the ongoing revenue growth has enabled hotels in Brussels to reduce payroll levels, which fell by 3.5 percentage points in November, they remain relatively high at 35.1 percent of total revenue. Despite this, profit conversion in November remained strong at 38.2 percent of total revenue.
In line with the growth in Brussels, profit increases in Dublin continue unabated, with GOPPAR growth now recorded at 68.4 percent over the last 36 months, hitting €96.51 in the 12 months to November.
Profit per room grew by 9.8 percent year-over-year to €83.13 and was the ninth consecutive month of profit growth for hotels in the Irish capital.
The November growth in profit was driven by revenue increases across all departments, but led by growth in RevPAR, which increased by 9.2 percent YOY to €139.95, as room occupancy hit 83.3 percent and achieved average room rate grew to €167.95.
Increasing revenues were complemented by falling costs, which included a 0.9-percentage-point decrease in payroll to 30.8 percent of total revenue and contributed to the ongoing positive story for Dublin hoteliers in the month.