London most resilient hotel market

Occupancy levels in the London hotel market increased by 1.5% in May 2009 compared with the same period last year. Whilst average room rate declined by 5.4%, London hoteliers were able to decrease their payroll expenses by 1.6%, resulting in a decline of just 2.9% in profit per available room (IBFC).

'The ability of London hotels to achieve occupancy levels in excess of 80% despite the recession reflects the strength of demand in the city” said Jonathan Langston, managing director, TRI Hospitality Consulting. 'Additionally, London hoteliers have maintained a tight control over payroll expenses as a response to reduced revenue levels, reflecting the flexibility of the British workforce relative to several continental European countries.'

Warsaw hoteliers have embarked on a strategy of driving average room rate levels at the expense of room occupancy, resulting in an increase of 3.7% in average room rate and a decline of 8% in room occupancy levels. This strategy has allowed the Warsaw hoteliers to contain the decline in rooms RevPAR relative to other eastern European cities including Prague, which experienced a decline of 27.1% in RevPAR.

TRI Hospitality said that typically, it is easier to build occupancy than increase average room rate in the aftermath of reduced demand levels and Warsaw hoteliers will be well positioned to drive RevPAR as the market starts to recover. In overall terms, however, Warsaw achieved the lowest room occupancy and average room rate of the 10 cities in May 2009, resulting in a rooms RevPAR of EUR 60.93.

Amsterdam and Prague experienced declines of over 20% in average room rate in May 2009 relative to the same period last year. However, despite a decline of 20.2% in average room rate, Amsterdam’s chain hotels achieved the highest rooms RevPAR in May 2009, which, at EUR 131.76 per available room, was ahead of London (EUR 27.31) and Vienna (EUR 117.20).