Hotstats releases Chain Hotels Market Review for Europe, Middle East

(Abu Dhabi)

HotStats has released its Chain Hotels Market Review for November 2016, with some notable developments in cities across the EMEA region. Here are some key takeaways from the report. 

Amsterdam Rooms Profit Hit by Falling Revenues and Rising Costs

The 5.9-percent drop in room profit in Amsterdam hotels in November was due to a 2.8-percent decline in rooms revenue, as well as rising costs, according to the latest data from HotStats. 

While hotels in Amsterdam were able to maintain room occupancy levels in November, at a lofty 80.9 percent, a 2.9 percent decline in achieved average room rate was directly responsible for RevPAR dropping to €135.06.  

The decline in RevPAR was in spite of the best efforts of Amsterdam hoteliers to drive demand via Online Travel Agents, evidenced by the 21.8 percent increase in Rooms Cost of Sales, to €7.31. However, the increase in this cost, as well as a 2.8 percent increase in Rooms Payroll, to €21.88 per available room, led to Rooms profit per room at Amsterdam hotels falling by 5.9 percent to €92.77 in November.

The performance of Amsterdam hotels this month reflects year-to-date trends. Despite RevPAR for the 11 months broadly remaining stable at €144.86, rising costs have resulted in Rooms profit conversion falling to 71.9 percent of Rooms revenue from 72.8 percent in 2015. 

Commercial Demand Drives Strong Profit Growth for Prague Hotels

Hotels in Prague recorded a 32.5-percent increase in profit per room this month with top and bottom line performance being driven by demand from the commercial segment. 

In addition to a 2.7-percent increase in achieved average room rate, to €91.12, RevPAR at hotels in the Czech capital was driven by a 7.3-percentage point increase in room occupancy, to 76.2 percent. This was not only due to in-house events at hotels polled, but also events at the Prague Conference Centre, which included the ECREA communication conference, which hosted more than 1,400 delegates.

The particularly strong month for the commercial sector was reflected by corporate and residential conference demand comprising more than 40 percent of total roomnights sold, compared to an average of 33.0 percent for year-to-date 2016; with strong rate growth achieved in both the corporate (+5.3 percent) and residential conference (+4.8 percent) segments. 

Despite increases in both payroll (+4.6 percent) and overheads (+1.4 percent) on a per-available-room basis, hotels in Prague saw a 32.5-percent increase in profit per room for November, to €51.71. 

Warsaw Hotels Set for Second Consecutive Year of Strong Profit Growth

A 15.4-percent increase in profit per room this month has helped secure a second consecutive year of strong profit growth for hotels in Warsaw following the 6.0 percent profit increase in 2015. 

Although hotels in Warsaw recorded a 0.9-percentage point decline in room occupancy for year-to-date 2016, this has been more than offset by the 11.1-percent increase in achieved average room rate, which has fueled a 9.9-percent increase in RevPAR, to €76.13. 

While growth in the commercial segment has been strong, illustrated by a rate increase in both the corporate (+12.8 percent) and residential conference (+10.9 percent) segments, rate growth has been primarily through the individual leisure segment, which increased by 21.9 percent for year-to-date 2016, to €90.22.  

Year-to-date 2016, the profit-per-room increase at hotels in the Polish capital has been recorded at 10 percent, to €50.42, equivalent to a 43-percent profit conversion, one of the highest of all the European cities polled. The growth is in spite of increasing costs, including payroll (+3.1 percent) and overheads (+3.9 percent) on a per-available-room basis. 

Middle East & North Africa

At $151.59, profit per room at Abu Dhabi hotels in November was 1.4-times higher than the year-to-date 2016 figure for the city at $63.33, but was 20.3-percent below November 2014 levels. 

2016 was a tough year for Abu Dhabi hotels, with a challenging economic environment leading to declines across all key measures in the 11 months to November 2016, including occupancy (-2.2 percentage points), ADR (-8.9 percent), total revenue (-10.7 percent) and profit per room (-13.7 percent). 

Despite RevPAR peaking for the year at $183.53, this measure was 17.4 percent off the high in November 2014 ($222.20) with profit per room also well below 2014 levels ($190.31). 

In addition to a 12.2-percent year-on-year drop in RevPAR, a decline was also recorded in the Food and Beverage (-8.7 percent) and Conference and Banqueting (-16.8 percent) departments on a per available room basis, which led to an 11.4 percent drop in TrevPAR, to $330.07. 

RevPAR Drop Belies Profit Problems at Amman Hotels 

The 5.9 percent RevPAR decline at Amman hotels this month masked the deeper issue of a 21.7-percent year-on-year profit drop for November as hoteliers fought to maintain top line performance. 

While achieved average room rate remains less of a problem at hotels in the Jordanian capital, with a 1.6-percent year-on-year increase recorded for year-to-date 2016, Amman hotels have struggled to capture volume throughout the year, illustrated by the 3.6 percentage point decline this month, to just 58.7 percent. 

In particular, the proportion of demand attributed to the commercial segment in the city has plummeted this month, illustrated by the 10.2 percent year-on-year decline in rooms revenue in the corporate segment. 

As a result, Amman hoteliers have been forced to invest in strategies to capture alternative sources of demand, such as individual and group leisure, and the greatest increase in expenditure this month has been in Rooms Cost of Sales (+6.2 percent), which is the cost primarily associated with Online Travel Agents, and Sales and Marketing (+20.8 percent) on a per available room basis. 

Although TrevPAR for Amman hotels fell by just 3.2 percent, increases in payroll (+0.5 percent) and overheads (+8.1 percent) resulted in profit per room decreasing to $39.95 for the month. 

Beirut Hoteliers Slash Costs to Boost Profit 

In addition to achieving a 6.3-percent year-on-year increase in RevPAR this month, hotels in Beirut successfully slashed costs to record a 47.9 percent increase in profit per room.

It has been a very mixed year of performance for hotels in Beirut, with profit growth recorded in just five months so far in 2016 and some heavy profit declines recorded across the year, particularly in June, as a result of a bomb blast in the city when profit per room fell by 96.4 percent to just $1.08. 

As concerns over safety have eased, the number of tourists to the city has increased, illustrated by the increase in the number of roomnights sold this month in the individual leisure (+4.8 percentage points) and group leisure (+3.5 percentage points) segments, which has provided a necessary boost to volume levels, demonstrated by the 6.5 percentage point increase in occupancy for the month.  

Despite only achieving a 0.3-percent increase in TrevPAR, savings were made in payroll (-6.6 percent) and overheads (-13.0 percent), which fuelled the extraordinary year-on-year profit increase to $35.06.