Profits soar in Germany hotel market

Tuesday 1, June 2010


Profits soar in Germany hotel market


Despite the volcanic ash cloud shutting down airports across Europe, the German hotel market experienced strong growth in April 2010 as the economy recovered from recession.


Driven by a 6.4 percentage point increase in room occupancy and 43.3% increase in average room rate, Dusseldorf experienced Revenue per Avaible Room (RevPAR) growth of 62.5% with Gross Operating Profit per Available Room (GOPPAR) increasing by a staggering 249%. Similarly, Frankfurt experienced RevPAR growth of 69.2% and GOPPAR increased by 236.7%. According to David Bailey, deputy managing director, TRI Hospitality Consulting “The German hotel market was hit hard by the recession in 2009 and as the economy continues to grow gradually, we are likely to see continued year-on-year increases in performance levels. These increases are, however, from a very low base and it is important to see them in this context”.


The Vienna hotel market, which also experienced significant declines over the course of 2009, recorded a 2.7 percentage point increase in room occupancy and 32.1% increase in average room rate, resulting in a 37.5% increase in RevPAR. According to statistics compiled by the Vienna Tourist Board, the number of Russian and Italian visitors to the city in April increased by almost 40% while there were declines in the number of British and American visitors. GOPPAR for the Vienna hotel market increased significantly by 114.7%.


Whilst the travel disruption across Europe resulted in a decline in RevPAR in several European cities in April, nine out of the 10 markets in our sample experienced growth in the calendar year to April 2010. Zurich was the only market in our sample to experience a marginal decline in RevPAR levels in the calendar year to April 2010 led by a 4.6% decline in the month of April. However, tight control over costs meant that Zurich hotels experienced an increase of 5.7% in GOPPAR over the period.


Volcanic ash casts cloud over London hotel performance | The airspace closure caused by the ash cloud from Eyjafjallajoekull in Iceland was the main reason for a 7.1 percentage point decline in room occupancy levels in London in April 2010. The situation was compounded by the political uncertainty in April as an increasing number of experts highlighted the risks of a hung parliament to the UK economy.


Bailey said “Whilst the disruption caused by the volcanic ash cloud initially led to an increase in room occupancy as people were stranded, London hoteliers were hit hard by cancellations as the disruption continued. However, hoteliers were successful in driving average room rate, which increased by 6.7%, limiting the overall decline in RevPAR to 2.2%”.


The impact of the ash cloud on other commercial centres such as Amsterdam, Paris and Frankfurt was limited relative to London as continental European countries are less reliant on air transport than the UK. In April, Paris experienced a decline of just 0.8 percentage points in room occupancy levels while room occupancy in Amsterdam increased marginally by 0.2 percentage points.


The Spanish Confederation of Hoteliers and Tourist Accommodation commented that disruption caused by the volcanic ash cloud cost hotels and tourist accommodation 192.5m. euros However, the impact was primarily felt in the Canary Islands and the Balearics as northern European holidaymakers cancelled holidays and driven by growth in room occupancy as well as average room rate, Barcelona experienced RevPAR growth of 24% and GOPPAR increased significantly by 54.1%.


(source: TravelDailyNews)



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