The latest data from HotStats paints a mixed picture for three European cities in May. Brussels hotels saw a massive increase in performance and profitability, Rome is on a RevPAR decline following a strong 2016 and demand in Warsaw is driving rate growth.
NATO Summit Drives Profit Growth for Brussels Hotels
Hotels in Brussels recorded a 116.8-percent year-on-year increase in profit per room in May, as a result of the Belgian capital hosting the NATO Summit.
The year-on-year increase in performance, which HotStats called "staggering," was led by an 18.7-percentage point uplift in room occupancy to 75.1 percent.
While more measured, the 3-percent increase in achieved average room rate, to €144.28, helped fuel the 37.2-percent increase in RevPAR for the month to €108.37.
This strength of demand in Brussels let hoteliers drive top- and bottom-line performance to some of the highest levels recorded since the terrorist activity in the Belgian capital in March 2016.
In addition to the increase in rooms revenue, hotels in Brussels successfully achieved an increase in non-rooms revenues, including Food & Beverage (+23.2 percent) and Conference & Banqueting (+26.4 percent), which fueled a TrevPAR (Total Revenue per Available Room) increase of 28.9 percent to €148.77.
While the strong top line performance let hoteliers in Brussels to record a 7.3 percentage point reduction in payroll levels, at 42.7 percent of total revenue, this cost still remains high against the European average of 28.9 percent. As a result, and in spite of the strong year-on-year increase, profit conversion at Brussels hotels remains relatively low at 26.6 percent of total revenue this month.
Hotels in Rome Coming Back Down to Earth After Holy Year High
Further to the standout performance of hotels in Rome in 2016 due to the Jubilee or Holy Year of Mercy, profit levels are realigning, illustrated by the 12.3 percent year-on-year decline in profit per room in May.
By this time last year, it was estimated that 9.1 million people had made the pilgrimage to Rome to celebrate the Jubilee. The increase in visitors let hotels in the Italian capital leverage average room rate and boost non-rooms revenues.
However, RevPAR performance this month has fallen by 11.5 percent as a result of a 3.4-percentage point decline in room occupancy as well as a 7.9-percent drop in achieved average room rate, to €224.56.
In addition to the drop in RevPAR, declining revenue in non-rooms Departments contributed to a 6.5 percent drop in TrevPAR to €287.36.
While hotels in Rome have been able to successfully modify costs to account for the falling revenues, illustrated by the savings this month in Payroll (-0.7 percent) and Overheads (-5.3 percent), the adjustment was not sufficient to offset the decline in revenue, and as a result profit per room fell to €107.63.
Warsaw Hoteliers Leverage Rate to Drive Profit
Hotels in Warsaw recorded a 17.1-percent increase in achieved average room rate in May, which fueled a 23.4 percent increase in profit per room, as hoteliers were able to leverage rate on the back of room occupancy levels of +80 percent.
The strength of demand let hotels in Warsaw achieve considerable rate growth across all market segments, including Best Available Rate (+14.5 percent), Residential Conference (+26.1 percent), Corporate (+8.4 percent), Individual Leisure (+30.9 percent) and Group Leisure (+17.3 percent).
Furthermore, increases were recorded in Non-Rooms Departments, including Food & Beverage (+8.8 percent) and Conference & Banqueting (+17.7 percent). As a result, TrevPAR at hotels in Warsaw increased by 12.7 percent year-on-year, to €141.35.
Payroll at hotels in Warsaw remains among the lowest in Europe, at just 21.5 percent of total revenue, following a 1.6 percentage point reduction this month. The meager payroll levels contributed to a profit conversion at a "staggering" 49.6-percent of total revenue this month.