Despite recording an increase in revenue across a number of departments, year-on-year profit per room…
April 5, 2018 9:30 am
Hotels in Europe maintained their strong start to the year by recording an 8.3% year-on-year increase in profit per room in February as growth was recorded across all revenue departments and was supported by cost savings, according to the latest worldwide poll of full-service hotels from HotStats.
GOPPAR at hotels in Europe surged to €31.30 this month, which represented a tenth consecutive month of profit growth for hotels in the region, signalling a truly positive period of trading for properties in the region.
The growth this month contributed to hotels in Europe recording a profit per room of €59.17 in the rolling 12 months to February 2018, which is 8.3% above the same period in 2016/17.
The growth in profit per room this month was driven by increases across all revenue departments as hotels in Europe successfully recorded a 3.2% year-on-year increase in TrevPAR, to €141.52, which was due to an increase in Rooms (+4.3%), Food and Beverage (+1.7%) and Conference and Banqueting (+2.3%) revenue on a per available room basis.
In line with the performance over the last 12 months, the growth in Rooms Revenue at hotels in Europe in February was driven by achieved average room rate, which increased by 3.4%, to €143.11, and was in addition to a 0.6-percentage point increase in room occupancy, to 62.8%.
Growth in headline performance levels this month were once again driven by the broad base of demand in the region, but were weighted towards the commercial sector as notable rate increases were recorded in the Residential Conference (+6.4%) and Corporate (+8.1%) segments, with a more limited rate increase in the Individual Leisure (+0.8%) segment.
Profit & Loss Key Performance Indicators – Europe (in EUR)
February 2018 v February 2017
RevPAR: +4.3% to €89.87
TrevPAR: +3.2% to €141.52
Payroll: -0.3 pts to 41.7%
GOPPAR: +8.3% to €31.30
The growth in revenue levels was supplemented by cost savings, which were led by a 0.3-percentage point reduction in Payroll, to 41.7% of total revenue.
The cost savings enabled hotels in Europe to increase further their efficiency and record a profit conversion of 22.1% of total revenue in February, an increase of 1.0-percentage points from same period in 2017, at 21.1% of total revenue.
Hotels in Madrid were amongst the top performing in February, recording a 24.1% year-on-year increase in profit per room for the month, to €38.79, on the back of an increase in revenues and a reduction in costs.
Top line growth at hotels in the Spanish capital was driven by an 8.4% increase in RevPAR as hotels in Madrid successfully recorded a 1.1-percentage point increase in room occupancy, to 69.2%, in addition to a 6.7% increase in achieved average room rate, to €150.70.
The increase in rate at hotels in Madrid in February was primarily due to growth in the commercial sector, which included an increase in the Corporate (+33.9%) and Residential Conference (+18.2%) segments.
Growth at hotels in Madrid, was also recorded in Non-Rooms departments, including Food and Beverage (+7.0%) and Conference and Banqueting (+9.4%), which contributed to the 7.3% increase in TrevPAR for the month, to €155.86.
Profit & Loss Key Performance Indicators – Madrid (in EUR)
February 2018 v February 2017
RevPAR: +8.4% to €104.22
TrevPAR: +7.3% to €155.86
Payroll: -0.6 pts to 43.6%
GOPPAR: +24.1% to €38.79
As well as the increase in revenue, hotels in Madrid successfully slashed costs, which included a 0.6-percentage point decrease in Payroll, to 43.6% of total revenue.
The growth in GOPPAR this month contributed to the 33.6% year-to-date increase in profit per room for hotels in Madrid and means hotels in the Spanish capital are already set to add another year of profit growth after consecutive increases in 2016 (+3.3%) and 2017 (+16.7%).
“The growth in top and bottom line performance for hotels in Madrid over the last couple of years has been supported by the elevated tourism profile of the city, which has contributed to Spain attracting a record number of visitors in 2017, to approximately 82 million. This has been in spite of anti-tourism protests across the country.
In addition, demand to hotels in Madrid in February was driven by the EAHAD medical congress, as the city remains a popular destination for business tourism,” said Pablo Alonso, CEO of HotStats.
In contrast, hotels in Munich suffered a 36.4% decline in profit per room this month, as headline performance levels plummeted due to a reduction in conference-related demand.
In particular, the Munich Security Conference, which attracted more than 680 participants in February 2017 was a much smaller event in 2018. And, despite accommodating a number of high-profile visitors and their entourage, including heads of state, government leaders, representatives of international organisations and top business leaders, the impact on local hotels was significantly lessened.
With the reduced demand from the conference sector, hotels in Munich suffered an 18.8% decline in RevPAR, which was due to a 13.0-percentage point year-on-year drop in room occupancy, to 64.7%, as well as a 2.6% decline in achieved average room rate, to €148.85.
A decline in Non-Rooms Revenues at hotels in Munich this month, illustrated by the 10.1% year-on-year drop in Food and Beverage Revenue on a per available room basis, contributed to a 16.4% decrease in TrevPAR, to €138.70.
Additional cost increases were also recorded in Overheads, which grew by 4.4-percentage points year-on-year, to 27.6% of total revenue.
As a result of the movement in revenue and costs, GOPPAR at hotels in Munich fell to €36.49 in February, which was equivalent to a profit conversion of 26.3% of total revenue. The decline in profit this month contributed to the year-to-date profit drop of 28.1% at hotels in Munich.
Profit & Loss Key Performance Indicators – Munich (in EUR)
February 2018 v February 2017
RevPAR: -18.8% to €96.36
TrevPAR: -16.4% to €138.70
Payroll: +4.6 pts to 39.1%
GOPPAR: -36.4% to €36.49
Occupancy (%) – Is that proportion of the bedrooms available during the period which are occupied during the period.
Average Room Rate (ARR) – Is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Room Revpar (RevPAR) – Is the total bedroom revenue for the period divided by the total available rooms during the period.
Total Revpar (TRevPAR) – Is the combined total of all revenues divided by the total available rooms during the period.
Payroll % – Is the payroll for all hotels in the sample as a percentage of total revenue.
GOP PAR – Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
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