September is typically a strong month of headline performance levels for hotels across the primary European hotel markets and 2012 was no exception with eight of the ten markets polled this month recording room occupancy levels in excess of 85%. Meanwhile in the Middle East and North Africa, Dubai, Saudi Arabia, Kuwait, and Egypt saw performance gains in September, according to the latest HotStats surveys by TRI Hospitality Consulting.
Volume levels were particularly strong this September for hotels with Amsterdam at 88%, Berlin at 88.1%, Dublin at 93.7%, London at 90.2%, Moscow at 85.5%, Paris at 88.3%, Vienna at 88% and Zurich at 90.8%.
Aside from room occupancy, huge average rooms rates were achieved in a number of markets with both Amsterdam at €204.09 (US$263.24) and Zurich at €203.65 (US$263.97), exceeding the typically stalwart London at €197.30 (US$255.74).
But, once again, it was Paris which superseded the performance of all its peers with an achieved average room rate of €242.18 (US$313.91), approximately 17% above the 12-month rolling average for the French capital, as the city benefited from strong demand from both the corporate, conference and leisure sectors.
However, a strong average ancillary spending in Zurich, which included food at €73.42 (US$95.17), beverage at €13.91 (US$18.03) and meeting room hire at €18.71 (US$24.25) revenue per available room, in addition to a premium rooms revenue per available room at €184.85 (US$239.60), enabled Switzerland’s largest city to achieve the highest TrevPAR of all the cities polled, at €302.98 (US$392.72), approximately 25% above the 12-month rolling total.
“September performance typically gives hoteliers across Europe a good opportunity to blow out the cobwebs of a long summer and hotels in London did not show any signs of an Olympic hangover. London hotels achieved a profit conversion of 52% of total revenue, which was the highest in Europe,” said Jonathan Langston, managing director at TRI Hospitality Consulting.
While a number of the top performers in September suffered a decline in profit per room, including Amsterdam, down 12.5%, Milan, down 1.6% and Moscow, down 1.1%, the GOPPAR levels achieved in these markets were an average of 80% higher than the year-to-date average for the individual cities.
In Milan, strong demand levels from the annual Fashion Week were supplemented this September by demand created by the Italian Formula One Grand Prix and events at the Milano Congressi, which included the Euretina and ESCRS medical conferences. As a result, profit levels were approximately 150% above the rolling 12-month average for the city.
The greatest margin of year-on-year profit growth in the European hotel markets polled this month was in those markets which have seen a resurgence in demand related to meetings, incentives, conference and exhibitions, according to the latest HotStats survey.
Vienna achieved the greatest margin of year-on-year growth with a paltry 2.4 percentage point increase in room occupancy supported by a 26.4% increase in achieved average room rate, which contributed to a year-on-year increase in RevPAR of approximately 30% to €163.48 (US$211.90).
The Austrian capital has had a tough time in recent years in the fallout of the economic downturn, but September’s busy month of events included conferences and exhibitions on lighting, maps and the economy, as well as the usual concurrent medical conferences (EPOS, EFORT, ESMO and ESCP) and a visit from the United Nations.
An increase in revenue across all departments contributed to a 43.1% year-on-year increase in profit per room for hotels in Vienna during September, to €98.45 (US$127.61) and equivalent to a profit conversion of 44% of total revenue.
In Berlin it was the IFA trade show for consumer electronics and home appliances as well as the International Symposium on Medical Chemistry which enabled a 14.5% increase in RevPAR, which was driven by a 3.3 percentage point increase in room occupancy and a 10.3% increase in achieved average room rate to €154.96 (US$200.86).
High ancillary revenue spends contributed to a TrevPAR which was approximately 35% above the 12-month rolling average and enabled a profit per room of €92.92 (US$120.44), equivalent to a profit conversion of 47% of total revenue, well above the year-to-date average of 36%.
Dublin was another star performer in September as the annual European Association for International Education conference made a stop in the city. As a result, hotels in Dublin achieved a staggering room occupancy of 93.7%, which was unsurprisingly the highest recorded of the European markets polled this month.
The six percentage point increase in room occupancy and 15% growth in achieved average room rate contributed to a 16.3% increase in TrevPAR to €223.73 (US$290).
However, profit performance for hotels in the Irish capital was impacted by payroll levels, which remained high at 30.4% of total revenue. As a result, hotels in Dublin achieved a GOPPAR of €88.18 (US$114.30), equivalent to 39% of total revenue.
Middle East and North Africa
Hotels in Dubai showed strong profitability throughout the month of September this year, although the market witnessed a 2.8 percentage point decrease in occupancy. ARR in the city increased by 3.9% to US$218.30, while TRevPAR grew 2.7% to US$311.59. The city hosted an array of events throughout the month of September allowing hoteliers to yield higher rates, thereby boosting GOPPAR 11.3% to US$93.66.
Abu Dhabi’s hotel market appeared stagnated as performance indicators declined significantly in comparison with September of last year with ARR decreasing 10.6% to US$124.28, and occupancies dropping 0.2 percentage points to 65.5%. RevPAR decreased 10.9% to US$81.37, and TRevPAR dropped 7.7% to US$188.93. The continued pressure on average rates coupled with a proliferation of competition depleted GOPPAR by 18.2% to US$56.78, the lowest registered profit in the GCC for the month.
“Dubai plays host to a miscellany of events throughout the month of September, namely INDEX and Gitex exhibitions which helped maintain healthy demand levels after Eid al Fitr. As the leisure segment continues to represent the largest demand in the city, the forecasted influx of leisure travellers over the next few months is likely to boost key performance indicators until the end of the year. On the other hand, hotels in Abu Dhabi continue to register weak performance mostly due to the city’s heavy reliance on corporate demand which remained subdued throughout September,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.
September also saw demand distribution normalize between the two surveyed markets in Saudi Arabia. Riyadh based hotels showed a strong come back as indicators bounced back from the slump seen during the summer months. When compared to the same period last year, occupancy rates in Riyadh show an increase of 4.1 percentage points reaching 60.5% while ARR increased 1.6% to US$250.60, among the highest in the region. Food and beverage revenues increased significantly suggesting an increase in events previously paused in accordance with the holy month of Ramadan. This upsurge in festivities accounted for a 10.5% rise in TRevPAR as well as a 10.1% increase in profits to US$131.4.
Similarly, hotel performance in Jeddah showed no signs of slowing as occupancies rose 6.2 percentage points to 81.5% in addition to a 3.9% increase in ARR to US$222.29. A rise in corporate demand owing to the return of business activity justified the 12.6% increase in RevPAR to US$181.24 which, coupled with an increase in food and beverage revenues, drove a growth in TRevPAR of 10.1% to US$278.90 leading to an 11.8% increase in GOPPAR to US$123.03.
“The steep increase in Riyadh’s performance is symptomatic of post-summer lulls, as businesses get back on track and corporate demand is spurred. Festivities and events halted during the holy month resumed, accounting for a large increase in food and beverage revenues which drove an increase in the bottom line” said Goddard.
Hotel performance in Egypt continues to show on-going signs of recovery. Occupancy rates in Cairo grew to 55.4%, while RevPAR and TRevPAR stood at US$63.63 and US$125.96 respectively. Demand in Cairo has long been divided proportionately between corporate travellers and leisure seekers, both of whom have restored their confidence in the destination allowing for GOPPAR to grow 19.2% to US$63.79. Sharm el Sheikh also boasted increases in performance indicators as occupancy grew 5.3 percentage points to 74.5% and RevPAR increased 5.1% to US$32.10. Profits in the popular destination remained subdued at US$20.61, mostly due to reduced rates granted to travel agents and inbound tour groups.
“Our HotStats data for September shows a steadily recovering Egyptian market with hotels in Cairo registering their highest profits in a year. Sharm el Sheikh is well on its way to recovery, in spite of travel agent fees that continue to diminish profit margins. With the city’s high season approaching we anticipate continued growth for the remainder of 2012 and early 2013,” said Goddard.
The hotel market in Kuwait witnessed a notable growth in overall performance as occupancies increased 10.3 percentage points to 60.4%, a change accredited to a post-summer increase in corporate demand in the city. ARR varied slightly from the same period last year decreasing 1.8% but remained the highest in the region monitored at US$255.29 predominantly due to the rate agreement. TRevPAR in the city increased 15.2% to US$300.07 as corporate demand grew allowing for hotels to post the highest profitability rates in the region for September at US$137.84, outperforming all other markets surveyed.
“Kuwait experienced a growth in demand in September due to increase in business activity after the summer period. The hotel market continues to benefit from the rate agreement, which maintains ARR at the top of the region. Although demand has re-bounded the on-going political troubles in the country could impact future demand as government backed projects remain subdued due to the absence of political stability” said Goddard.