The metrics from Europe's hotels in June prove that revenue and profit aren’t always aligned, according to the latest report from HotStats. Revenue per available room at mainland European hotels attained a high for the year in June, but GOPPAR fell.
Falling ancillary revenues and rising costs prevented gains made in rooms from flowing through to the bottom line, according to the latest data tracking full-service hotels from HotStats.
At €158.82, RevPAR was a high for 2019 and also exceeded the previous peak of €157.09 from June 2018.
The spike was led by a 1.4-percentage-point year-on-year increase in room occupancy to 82.5 percent, and was in spite of a 0.5 percent decline in achieved average room rate, which fell to €192.61.
However, the growth in RevPAR was matched by falling ancillary revenues, which included a decline in food and beverage (down 3.2 percent) and conference and banqueting (down 11.2 percent), on a per-available-room basis.
This contributed to the 0.5 percent year-over-year decline in TRevPAR to €226.66, which also was hit by rising costs that included a 2.2 percent increase in payroll to €62.25 per available room.
As a result, profit per room fell 2.8 percent in the month to €101.00.
“June was the perfect example of why strong rooms revenue doesn’t always equate into a strong bottom line,” said Michael Grove, managing director, EMEA, at HotStats. “It’s never enough to rely on top-line growth. Hoteliers have to keep an eye on cost and focus on growing revenue streams in areas beyond rooms.”
June in Paris
Paris, for one, bucked the profit trend in June. GOPPAR levels there improved 23.5 percent on the back of the 53rd Paris Air Show, the largest air show and aerospace-industry exhibition in the world, according to the report.
The biennial event brought more than 315,000 visitors and helped hoteliers in the city reach a 16.4 percent year-over-year increase in achieved average room rate, which hit €472.86. This was more than €120 above the year-to-date average at €352.26.
A 19.5 percent increase in RevPAR fueled a 10.6 percent year-over-year increase in TRevPAR to €568.66, and came despite an 8.2 percent decline in ancillary revenues, which fell to €151.43.
The GOPPAR growth came against relatively high payroll levels at €191.01 per available room, equivalent to 33.5 percent of total revenue.
All Roads Lead to Rome
It also was a relatively positive month for hotels in Rome, which managed to limit the decline in profit per room to just 0.2 percent to €157.96, in spite of Italian authorities placing the city under high alert for dangerous temperatures as Europe was hit by a period of unusually hot weather.
The heat seemed to have little impact on visitors to the Italian capital, as RevPAR increased 4.8 percent year over year to €277.57, which was a high for 2019.
At the same time, falling ancillary revenues meant TRevPAR at hotels in Rome grew by just 1.6 percent this month to €394.54.
And rising costs—a 3.2 percent increase in payroll—wiped out the growth in revenue, resulting in a second consecutive month of year-over-year profit decline in an otherwise positive year of trading so far in 2019.