GERMANY Both Düsseldorf and Frankfurt registered double-digit declines in RevPAR during April, a reflection of continued weak leisure travel business across much of Germany.
Düsseldorf in particular has posted some depressing numbers, having lost about two-thirds of the gross operating profit per available room (GOPPAR) that the market recorded a year ago, according to the latest HotStats survey from TRI Hospitality Consulting.
“The headline numbers look particularly grim for the German cities, but this reflects their weak leisure business,” says TRI Managing Director Jonathan Langston. “The rolling 12-month numbers actually show double-digit increases in profit with the drop in April down to the move of Easter.”
Düsseldorf and Frankfurt hotels registered respective declines in RevPAR of 30.1% and 23.4%, as the value and volume of commercial demand decreased significantly. As a result, total RevPAR declined in both markets by 23.9% and 18.6%, resulting in GOPPAR declines of 69.5% in Düsseldorf and 45.4% in Frankfurt.
In addition to the Easter holiday period, both cities lacked the huge volume of demand created through significant biennial events. In Düsseldorf, the Wire and Tube festival was badly missed, with branded upmarket hotels charging rooms in excess of €300 over a six-day period in April 2010.
In Frankfurt, the absence of the Light and Building exhibition was the significant cause of RevPAR decline. In addition, many guests to the 2010 exhibition were stranded due to the Iceland ash cloud, which enabled hoteliers to capitalize on the surge of demand caused by the freak event.
“German cities with greater leisure appeal, such as Berlin and Hamburg, continued to enhance revenue and profit performance in April, and in all likelihood April 2011 performance is not reflective of the year-round trend of all German city markets, including Düsseldorf and Frankfurt, which is indicating sustained profit growth,” Langston says.
In the 12 months to April, Düsseldorf and Frankfurt markets have experienced GOPPAR growth of 27.5% and 16.3%, respectively.
Strong profit growth in other Europe cities
Of the remaining 10 Europe cities surveyed in the latest HotStats report, eight achieved an increase in GOPPAR performance.
In London, the highly anticipated royal wedding was expected to boost revenue and profit growth. Despite great international interest and reported increases in visitor levels, the event did not have a positive effect on London hotel market revenue and profit performance. Instead, poor 2010 results deriving from the Iceland ash cloud inflated this April’s numbers.
Overall, the London market increased total RevPAR performance by 11.2% to €173.83 and GOPPAR performance by 13.3% to €76.14.
Amsterdam continues to register robust results, increasing GOPPAR performance by 43.2% to €98.46 in April. Over the 12-month period to April, GOPPAR performance has increased by 35.2%.
Budapest experienced the highest RevPAR growth (24.9%), supported by a 15.9 percentage point increase in occupancy performance to 76.1%. Rome experienced a significant increase in average room rate performance (7.3%), increasing RevPAR performance to €153.62.
Dublin continued its path to recovery as GOPPPAR performance increased by 41.9% in the month of April.
“Overall, there is evidence of a sustained and robust trend of revenue and profit growth in the leading European city markets,” Langston says. “Whilst there is some uncertainty in some parts of Europe given the wider economic climate, there continues to be a positive trend, which is encouraging.”