European hotels see Q1 drop in occupancy and profits - TRI Hospitality

The majority of Europe's hotels have experienced lower occupancy and profits so far this year, according to TRI Hospitality's March HotStats report. Of the ten cities surveyed, eight experienced a decrease in profits while six cities had lower occupancy. The sharpest occupancy drop occurred in Warsaw, which saw a first quarter decrease of 8.3% to 61.3% occupancy. The difficulty of increasing the average room rate led to a 17.9% decline in gross operating profit. Warsaw nevertheless remained the fourth most profitable city surveyed, just behind Amsterdam.

The highest occupancy and profit figures belong to London’s hotel market, with gross operating profits 23% higher than second-place Paris. Profits were further maximised in London by keeping payroll costs at a lower percentage to total revenue than in cities such as Prague and Warsaw. The fastest growth was recorded by Budapest hotels, which saw a 4.4% rise in average occupancy and 45.5% increase in daily gross operating profit to EUR 16.49 per available room. Budapest's figures were helped by starting from a low base and the city ranked last on the survey in profits and second-to-last in occupancy.

One factor in the overall decline in first quarter performance was this year's early Easter. 'The hotels in our European sample are primarily city centre four and five-star business hotels and although they may attract some leisure demand during the Easter holidays, it tends not to compensate for the losses in rate and volume from the corporate market,' said Jonathan Langston, managing director, TRI Hospitality Consulting. 'In Warsaw’s case there was already a similar rate of decline in occupancy and profit before Easter so it’s unlikely that the early holiday period alone skewed the three-month figures.'