RevPAR continues growing across Europe, Rezidor says

BRUSSELS The Europe hotel market is continuing its long road to recovery, with RevPAR growing in all significant markets, The Rezidor Hotel Group says in its first quarter earnings report.

On an aggregated Europe level, industry numbers show an accumulated RevPAR growth of 9% for the two first months of 2011, reflecting a good mix between occupancy and rate as growth drivers. The market development has been helped by unusually slow supply growth, Rezidor says.

At this point, growth is being led by countries that experienced a particularly weak 2009 and 2010. A very positive RevPAR development in the Baltic markets is a good example of poor performers bouncing back.

Eastern Europe has been Rezidor’s best-performing market in the first quarter, followed by the Nordics, where the improvement was partly supported by the fact that Easter falls in the second quarter this year. The rest of Western Europe has also reported substantial growth, and the company sees continued solid development in Germany. In the Middle East and North Africa, the recent political unrest, as expected, had a negative impact on RevPAR development.

“The first quarter is seasonally the weakest of the year,” says Rezidor President and CEO Kurt Ritter. “We recorded a strong revenue growth and an improved EBITDA over last year. The margin development was, however, dampened by the opening up of a significant number of leased hotels since the first quarter of 2010.”

Major Western Europe markets that started to recover in 2010 continue to experience positive development, Rezidor says. Last year, Germany RevPAR was supported by a lowered VAT; despite the lack of a similar support this year, the market continues to show a stable growth. The pattern in the UK is the same, but with London being the engine and a slower RevPAR growth in regional destinations. The effects of government spending cuts in the UK still remain to be seen.

All Nordic markets have had steady RevPAR growth in the beginning of 2011, with Denmark taking the lead after a weak 2010. Both Norway and Sweden are growing, while Norway seems to have benefitted more from the late Easter holiday.

In North Africa and the Middle East, the recent political unrest has had a negative impact on Rezidor’s RevPAR development. The economic development in southern Europe has had less impact on Rezidor, as the group has no presence in Greece and less than 1% of rooms in operation are in Portugal and Spain.

Three of the four geographic segments reported a like-for-like RevPAR growth, in total driven almost equally by occupancy (3.5%) and ADR (2.9%). The biggest growth was seen in Eastern Europe (11.5%), followed by the Nordics (10%). The increase in Eastern Europe is primarily driven by occupancy (11.7%), with a minor ADR increase (0.4%), with the Baltics, Russia and Turkey being the key growth drivers.