Market Report Europe

European Chain Hotels Market Review - September 2017

GOPPAR levels for hotels across Europe peaked for the year at $93.88 this month, as punchy room occupancy levels enabled hoteliers to leverage achieved average room rate, according to the latest worldwide poll of full-service hotels from HotStats.

GOPPAR levels for hotels across Europe peaked for the year at $93.88 this month, as punchy room occupancy levels enabled hoteliers to leverage achieved average room rate, according to the latest worldwide poll of full-service hotels from HotStats.  

Room occupancy levels at hotels in Europe hit 82.5% this month, the highest level recorded in the region since September 2015, when volume hit 82.7%. 

Extraordinary room occupancy levels were witnessed at hotels across a range of European cities, including Barcelona (88.5%), Budapest (89.1%), Dublin (92.4%), Prague (90.7%) and Warsaw (88.1%). 

The premium room occupancy levels enabled hoteliers to leverage average room rates to good effect with the most significant year-on-year margins of growth recorded in Budapest (+10.0%), Dublin (+31.2%), Istanbul (+26.8%) and Madrid (+17.0%). 

September is a month which is renowned for conference activity across the region and alongside a return of demand from the corporate segment after the summer break, it is typically a peak month of performance each year and this year was no different. 

Whilst the growth in achieved average room rate was more measured for the region, at +4.3% year-on-year, to €179.72, the rate increase contributed to a 5.5% uplift in RevPAR for hotels in Europe to €148.27. 

Profit & Loss Key Performance Indicators – Europe (in EUR)

September 2017 v September 2016 

RevPAR: +5.5% to €148.27

TrevPAR: +4.7% to €217.46

Payroll: - 0.2 pts to 28.2%

GOPPAR: +7.0% to €93.88

In addition to the year-on-year growth in RevPAR, an increase in Non-Rooms Departments, including Food and Beverage (+3.8%) and Conference and Banqueting (+3.2%), contributed to the 4.7% increase in TrevPAR, to €217.46, which is the highest TrevPAR level recorded at hotels in Europe since the recession.

In addition to the year-on-year increase in TrevPAR, a reduction in costs, including a 0.2 percentage point saving in Payroll to 28.2% of total revenue, helped hotels in Europe record a 7.0% increase in GOPPAR, to €93.88. This was 52% above the year-to-date profit per room level recorded in the region at €61.59. 

“Hotels in Europe are currently benefiting from very strong fundamentals which are driving top and bottom line performance to record levels. 

Typically, performance levels at hotels across the region peak for the year either side of the summer due to a seductive blend of commercial and leisure demand. This year is no different and astute operators are effectively yielding demand to record growth across the P&L,” said Pablo Alonso, CEO of HotStats.   

Profit & Loss Key Performance Indicators – Milan (in EUR)

September 2017 v September 2016 

RevPAR: +20.5% to €229.37

TrevPAR: +17.1% to €319.79

Payroll: - 2.6 pts to 22.5%

GOPPAR: +29.6% to €152.49 

The September effect was no better illustrated than in Milan, where occupancy levels reached 86.0%, almost 14 percentage points above the year-to-date average and achieved average room rate soared by 17.0% to fuel a 20.5% increase in RevPAR, to €229.37. 

In addition to the volume from the corporate and leisure segment, demand from the meetings and events sector was supported by the European Respiratory Society International Congress, which was hosted by the MiCo Milano Congressi and welcomed more than 22,000 delegates from 130 countries. 

The strength of demand in the commercial segment enabled hoteliers in Milan to record a 22.0% increase in the residential conference sector rate to €328.13, with the volume of demand from this segment swelling to 21.4% of the total from just 9.6% of demand in the eight months to August 2017. 

In addition to the growth in Rooms Revenue this month, growth in Other Revenue enabled hotels to record a 17.1% increase in TrevPAR, to €319.89. And with Payroll falling by 2.6-percentage points to 22.5% of total revenue, hotels in the Italian city achieved a profit conversion of 47.7% of total revenue.  

At €152.49, the GOPPAR recorded at hotels in Milan this month is the highest since the recession, even exceeding September 2015 (€147.73) levels when visitors flooded the city to visit the World Fair. 

Hotels in Madrid also fared well in September, recording a 14.9% increase in RevPAR, to €155.16. This was due to a 17.0% increase in achieved average room rate, to €180.98, which offset the 1.7 percentage point decline in occupancy. 

Although RevPAR levels this month were behind June, they were still 33.5% ahead of the year-to-date average, of €116.18, illustrating the strength of demand this September.

Profit & Loss Key Performance Indicators – Madrid (in EUR)

September 2017 v September 2016 

RevPAR: +14.9% to €155.16

TrevPAR: +10.4% to €217.19

Payroll: - 2.4 pts to 29.1%

GOPPAR: +21.5% to €96.21 

For hotels in the Spanish capital, the 21.5% year-on-year increase in profit per room in September contributed to the 17.0% year-to-date increase in GOPPAR and means hotels in Madrid are on course for another great year of bottom line growth in 2017 following the increases in 2015 (+30.7%) and 2016 (+3.3%). 

“The performance of the hotel market in Spain is very much aligned with GDP movement, which is due in part to the dependence of the economy on tourism. This is no better illustrated than in the capital, where the recovery from the recession and subsequent surge in economic growth has resulted in consecutive years of profit growth at hotels in Madrid. 

That said, whilst after nine long years GDP in Spain returned to pre-recession levels earlier in 2017, profit levels at Madrid hotels recovered their ground some time ago and have since gone from strength to strength on a solid foundation of business and leisure tourism,” added Pablo. 

HotStats provides two reporting tools to hoteliers:

Our unique profit and loss benchmarking service which enables monthly comparison of hotels’ performance against their competitors. It is distinguished by the fact that it provides in excess of 100 performance metric comparisons covering 70 areas of hotel revenue, cost, profit and statistics providing far deeper insight into the hotel operation than any other tool.

Our latest innovation in daily revenue intelligence, MORSE. Amongst its reporting are daily and highly granular market segmentation metrics as well as distribution channel and source of booking analysis. It takes daily market intelligence to a whole new level.

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