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European chain hotels suffered in 2008
TRI Hospitality Consulting has published its full-year HotStats survey, revealing a fall in profit, revenue and occupancy for European chain hotels last year.
Seven out of the ten cities surveyed reported decreases in gross operating profit.
The agency’s deputy managing director, David Bailey, said: “Most European hotel markets enjoyed profit growth for the first eight months of the year, but the rapid downturn in trading since August affected the full-year data.”
The three cities surveyed where branded hotels demonstrated an increase in profits for the full year were Berlin, Budapest and Hamburg.
“These cities were not overly exposed to the banking crisis and their hotels did not enjoy such a trading boom during 2007 compared to other cities, hence the profit increases on the back of relatively modest performances,” explained Bailey.
A sample of full-service hotels in Berlin showed a 1.9 per cent rise in daily income before fixed charge (IBFC), whereas those in Hamburg showed a higher rise in overall daily IBFC of 2.4 per cent, fuelled by a nursing congress and the attraction of the city’s Christmas markets and musicals.
In Budapest, hoteliers reported an overall profit increase of 5.4 per cent.
In contrast, Prague experienced the greatest fall in profitability with its IBFC down by 29.7 per cent owing to a low demand for business meetings and conferences, hampered further by a low turn out of the traditionally strong Greek visitor market at Christmas, with political unrest and riots keeping them at home.
In absolute terms, London had the highest average occupancy of 82.2 per cent for the full year and enjoyed the most profitable hotel market in the survey, while Paris recorded the highest average room rate, seconded by Amsterdam and then Vienna.
Commenting on future projections, Bailey speculated: “The 2008 full-year European data was generally characterised by falls in average occupancy, while average room rate continued to grow.
“The ability to repeat this performance in 2009 would be nothing short of miraculous. Yet accepting some fall in demand as a fact of life while protecting room rates as much as possible will be the most successful damage limitation strategy for hoteliers.”
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