Revenue levels drop at Europe's hotels

Radisson Hotel Group has rebranded the Strand Stockholm under the Radisson Collection following a two-year refurbishment. 
Hotels in Stockholm, like the Radisson Collection Hotel, Strand Stockholm, recorded profit-per-room decline of 21.3 percent year over year. Photo credit: George Rex / CC BY-SA 2.0

Profit per room at hotels in mainland Europe fell for a fifth consecutive month in April as revenue levels continued to weaken across all departments, according to the latest data from HotStats tracking full-service hotels.

Total gross operating profit (GOPPAR) fell 8.4 percent year over year. 

In addition to a 1.2-percent decrease in revenue per available room (RevPAR) to €114.51, hotels in the region recorded a 7.4 percent decline in ancillary revenues in April to €53.96. This was led by a year-on-year drop in revenue from food and beverage (down 8.4 percent) and conference and banqueting (down 16.6 percent) on a per-available-room basis.

While total RevPAR (TRevPAR) has showed signs of greater resilience, April was the second consecutive month of decline in this measure, which fell by 3.4 percent to €168.47. Although this was a high for 2019, it was 3.9 percent behind the TRevPAR for the rolling 12 months to April 2019 at €175.23. 

On a positive note, payroll levels fell 0.5 percent to €56.90 on a per-available-room basis. This was the first time hotels in the region recorded a saving in this measure since December 2016. 

As a result of the movement in revenue and costs, this was the second-largest drop in profit in 2019 following the 10-percent year-over-year decline in January. 

“After 25 months of almost consistent growth, profit per room at hotels in mainland Europe is now deteriorating as revenues slide and costs escalate,” said Michael Grove, HotStats' director of intelligence and customer solutions, EMEA. “The pace of decline is worrisome with GOPPAR back at August 2018 levels.” 


In line with the challenges facing the region, April was a tough month for hotels in Stockholm, as profit per room fell 21.3 percent year over year to €59.21. 

As the days continue to lengthen, hotels in Sweden's capital typically see an improvement in top- and bottom-line hotel performance. However, this has not been the case in 2019, as profit per room in April was 5.7 percent lower than in March.  

The decline in profit was on the back of a 10.6-percent drop in RevPAR, as achieved average room rate crashed by 13.0 percent to €140.44. It was further hit by a 12.6-percent decrease in ancillary revenues to €67.81.  


Although hotels in Romania's capital performed well in April, HotStats noted, profit levels in the Romanian capital were hurt by a 17.3-percent increase in payroll to €31.17. This figure, however, remains relatively low, equivalent to just 23.6 of total revenue. 

Hotels in Bucharest continue to perform well in spite of room occupancy falling, illustrated by the 5.6-percentage-point drop in April to 74.6 percent. This, however, was alleviated by a 17.2 percent increase in ADR, which grew to €118.18 as the city hosted a packed program of conferences, HotStats reported. 

The 8.9-percent increase in RevPAR to €88.14 was assisted by growth in ancillary revenues, which fueled an 8.1-percent increase in TRevPAR to €131.85. And, in spite of the significant cost increase, GOPPAR at hotels in Bucharest grew by 3.6 percent in April to €60.62.