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Hotel chains across Europe feel the pinch

Chain hotels across Europe’s major cities are suffering the fall-out from companies cutting back on employee travel. Occupancy, revenue and profit per available room in November 2007 fell in all of the ten cities surveyed by TRI Hospitality Consulting compared to the same month a year earlier.
The global economic slowdown and consequent decrease in international travel caused substantial falls in operating profit, also known as income before fixed charges (IBFC).

Jonathan Langston, Managing Director, TRI Hospitality Consulting said: “November was the first month that many companies implemented new restrictions on travel for their employees. For hoteliers, in addition to the trips not made, this also meant short-notice cancellations.”

The HotStats sample of branded hotels in Amsterdam reported the greatest decrease in profit - a 37.6 per cent fall in IBFC to €58.72 per available room. Average occupancy in the Dutch capital fell by 15.8 percentage points to 69.1 per cent and average room rate was down by 6.3 per cent to €165.71.

The leisure market also took a hit, with destinations such as Amsterdam, Prague and Vienna hosting fewer hen and stag or cultural overnights. Hoteliers reported that tour groups from the US were getting cancelled due to lack of participants.

“In many key markets, falls in occupancy have widened from August onwards and, unfortunately, any rapid reversal of this trend looks increasingly unlikely,” said Langston.


In Vienna, occupancy was down by 12.8 percentage points to 63.9 per cent, the second lowest in the survey. The opening of 9 new hotels over the last year is a further factor in the dilution of Vienna’s occupancy. Only three cities in the survey - Hamburg, London and Paris - reported average occupancy above 70 per cent. London was the clear leader with 81.5 per cent occupancy.

Despite falling volume, five of the ten cities reported increases in rate. Paris put in the best performance with a 3.2 per cent rise in achieved average room rate to €212.32, the highest in the survey.

In absolute terms, Paris reported the highest daily room sales of €157.86 per available room and London was in second place with a daily figure of €150.13. Regarding profit, the reverse was true, London was the most profitable hotel market with daily IBFC of €120.06 per available room compared to Paris in second place with a daily figure of €81.10 per available room.