* In 2004, revenue per available room (RevPAR) rose by 3.7% at the EU level.

* Rooms revenue incl. of tax for corporate chains grew by around 5% to reach 24 billion euros incl. of tax.

* The United Kingdom is at the head of the recovery. Germany registered a rise in growth above the European average.

These preliminary results stem from the MKG Consulting database, and are based on the data of results available as of 11/01/05. They will be updated upon the reception of difinitive results from chain hotels for the month of December 2004.

The European hotel industry picked up with economic growth in 2004

In 2004, the annual assessment of the European hotel sector posted an improvement of 3.7% in RevPAR versus 2003. After three years of consecutive falls in the revenue per available room, it is with relief that professionals of the sector observed a return to growth in 2004, with occupancy rates that rose along with the average daily rates. These trends lead one to envision an improvement in rooms revenue for the corporate chain hotel industry, which should be over 5% for a total of 24 billion euros including tax.

The United Kingdom and Austria leading the recovery

The recovery that was seen in 2004 hides situations that vary between the countries. In Austria and the United Kingdom, the recovery process was well underway in 2004 with sustained growth in RevPAR. These countries were a part of those that were hit the earliest and hardest by the slowdown in business in 2001 with large drops in average daily rates.

Among the large European countries, Germany presented one of the best recoveries of the year. The rise in RevPAR in 2004 passed 4%, and was largely sustained by the rise in occupancy rates. The German chain hotel industry is largely characterised by occupancy levels are generally low, with large differences between weekdays and weekends, falls in occupancy in the summer and a large dependence on business customers.

German upmarket hotels have therefore also had the objective of developing a more diversified business mix, via sales policies marked by large rate hikes during fairs and exhibitions. Another element that explains the difficulties in increasing rates: the overcapacity of numerous large cities in the country.

France posted results that were slightly below the European average (+2.3% increase in RevPAR). With a very large economy hotel supply (0*, 1*, 2*), the results of the sector in France present a smaller degree of variation, both in the recession and recovery periods.

Thus, in the majority of these countries, the year 2004 will remain a year of recovery. Certain economic factors have nonetheless been able to limit the strength of the recovery: notably the unfavourable euro/dollar exchange rate for American customers and the rise in the price of oil, which has trickled down to airline companies and their rates. The year 2004 will nonetheless mark a return to growth for the majority of European countries. In the large hotel countries such as France (-2.4% in 2003), Germany (+3.1%) and the United Kingdom (+2.3%), the 2004 fiscal year will even allow forgetting a delicate 2003.

For the year 2005, the rise in RevPAR should continue. At the level of the European Union, GDP growth was forecasted by OECD to be equal to those seen in 2004 (+2.1%), far above 2003 (+0.9%). MKG Consulting’s econometric analyses confirm the impact of these change in GDP on hotel activity. The midscale and upscale segments, more sensitive to the business climate, should notably register significant improvements in their RevPAR. France and Germany should see their results progressively come closer to those of the United Kingdom, which has is already well in its recovery phase this year.

Methodology - The MKG Consulting Database for Europe contains a sample of 6,000 corporate chain hotels, representing 600,000 rooms in Europe. The data, gathered monthly and for each hotel, is redressed according to the category within the corporate chain hotel supply and by the weight of each country in the European Union. MKG consulting has the largest hotel database in the world outside the USA, with an excellent representation of all the hotel segments.
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