Hotels in Europe recorded a 3.6-percent increase in gross operating profit per available room throughout July 2017, with hotels in Budapest leading the way.
Budapest hotels saw a 27.1-percent year-on-year increase in profit per room, according to the latest worldwide poll of full-service hotels from HotStats. HotStats reported a 0.4-percent year-on-year decline in room occupancy at hotels in Europe in June, reaching 78.7 percent. This was more than offset by the 4.9-percent increase in average daily rates to €180.04. The ADR increase fueled a 4.4-percent increase in RevPAR to €141.75. In addition to the growth in rooms revenue, hotels in Europe recorded a 0.5-percent increase in food and beverage revenue to €36.61 per available room, which contributed to the 2.9-percent increase in total RevPAR to €208.84.
The growth in top line performance, which was primarily driven through rate, was further supported by cost savings, which included a 0.1-percent reduction in payroll to 29.6 percent of total revenue. This enabled hotels in Europe to record a 3.6-percent increase in GOPPAR to €85.55. The GOPPAR growth in June contributed to the year-to-date increase in profit per room of 8.2 percent to €53.81. This is equivalent to a profit conversion of 32.4 percent of total revenue at hotels in Europe for H1 2017.
“Hotels in Europe have had a good first half of the year and consumer confidence will be buoyed with the IMF recently upgrading its 2017 growth projections for many EU countries, including France, Germany, Italy and Spain, on the back of Q1 growth exceeding expectations,” Pablo Alonso, CEO of HotStats, said in a statement.
One of the top performing hotel markets in Europe this month was Budapest, which recorded a 27.1-percent year-on-year increase in GOPPAR to €78.51 as RevPAR had a 23.4-percent uplift to €121.51 and TrevPAR increased by 19.2 percent to €164.49. The growth in rooms revenue was primarily driven by a 17.6-percent increase in achieved average room rate to €142.41 as occupancy hit 85.3 percent. While Budapest experienced an uplift in leisure tourists to the city, this month's growth was fueled by business visitors as the Hungarian capital continued to establish its profile as a destination for meetings, incentives and corporate events. The strong commercial demand levels fueled an uplift in rate in both the corporate (up 25.9 percent) and residential conference (up 13.0 percent) segments.
A 1.0-percent reduction in payroll levels to just 21.5 percent of total revenue enabled hotels in Budapest to achieve a punchy profit conversion of 47.7 percent of total revenue for the month.
“While a lack of supply and burgeoning demand levels has enabled hotels in Budapest to drive a 46-percent increase in RevPAR over the last 36 months, it is noteworthy that astute hoteliers have leveraged this into a 60-percent increase in GOPPAR during the same period,” Alonso said.
June was also a strong month of performance for hotels in Paris, which recorded an 8.1-percent increase in GOPPAR to €161.75 as total RevPAR saw a 4.2-percent increase to €484.25. The year-on-year growth in profit per room by 6.3 percent to €337.85 this month was helped by the biennial Paris Air Show. As a result of the 40.7-percent year-on-year drop in GOPPAR in Paris during 2016 due to terrorist attacks, heavy flooding and strikes, hotels in the French capital are just now getting back on track, with the growth in June contributing to an 8.7-percent increase in profit per room for year-to-date 2017 to €60.65.
While hotels in Paris have been forced to operate more efficiently because of the tough operating period in 2016 and have effectively cut costs in many key departments, the highest payroll levels in Europe continue to challenge profit performance at hotels in the French capital. Profit was recorded at just 17.1 percent of total revenue for year-to-date 2017 as June 2017 saw a decrease by 0.9 percent to 37.9 percent.