Europe hotel chains see profits and occupancy drop in August

European chain hotels reported a dismal August with substantial falls in demand and profit, according to the latest report from hotel performance benchmarking firm Hotstats.

The survey showed that average occupancy dropped in nine city markets and profit fell in eight of the 10 markets examined.

The report noted that this was the first time such large declines in occupancy had been seen. Key leisure destinations such as Prague, Vienna and Amsterdam all recorded fewer overnight guests in August.

Average occupancy dropped the furthest in Vienna, down to 71.6%. Weaker domestic demand and reduction in overnights by North American (-20%) and Japanese (12%) visitors were cited as a contributory factor.

Prague witnessed the most extreme decline in profitability. The survey found that daily income halved to EUR 33.06 per available room this August from EUR 65.10 in August 2007. A major contributor to Prague's plummeting profit was the 22.6% drop in achieved average room rate to EUR 84.01.

Munich bucked the negative profit trend with an impressive 32% rise in daily IBFC to EUR 45.10 per available room. Increased profit was driven by a 33.4% rise in achieved average room rate to EUR 131.42.

Elsewhere, performance in London remained steady. The UK capital was top of the list of most profitable hotel markets in the survey with a daily IBFC of EUR 79.03 per available room. It also had the highest average occupancy at 84.6%. Paris reported the highest achieved average room rate, up 5.8% year-on-year to EUR 222.39.