Hotels in the Belgian and Catalan capital achieved huge profit growth in April as significant increases were achieved in average room rate, according to the latest HotStats survey. 

For hotels in Brussels, a 24% increase in achieved average room rate to €140.04 contributed to a 32.3% increase in Revenue per Available Room (RevPAR), to €100.30 from €75.79 during the same period in 2011.

The growth in average room rate was primarily achieved through increases in the corporate (+20.7%), residential conference (+33.3%) and Best Available Rate (+61.4%) segments in Brussels as the city benefited from a busy calendar of events, such as high-profile NATO meetings, the EU-organised ‘Innovation in Healthcare’ conference and the 24,000 strong attendance to the European Seafood Exhibition, creating significant demand for bedroom accommodation.

Due, in part, to the 26.5% increase in Total Revenue per Available Room (TrevPAR), profit per available room at hotels in Brussels increased by 140.4% in April to €38.54, equivalent to a profit conversion of 28% of total revenue.

In Barcelona, a 15.3% increase in achieved average room rate to €148.20 contributed to a 23% increase in RevPAR, which put the aggregated performance of hotels in Barcelona in the top half of the table of markets polled this month. 

Gross Operating Profit per Available Room (GOPPAR) at hotels in Barcelona increased by 48.7% this month to €75.65 per available room, equivalent to a profit conversion of 43.9% of total revenue.

In addition to capturing new conferences such as The International Liver Congress, the city’s hoteliers benefited from major fixtures at the Nou Camp, with visits from Chelsea and the ‘El Clasico’ against Real Madrid. In addition, the city hosted the Cursa El Corte Ingles 11km run, which attracted 60,000 participants and is one of the biggest races of its kind globally.

“Barcelona in particular has experienced some especially tough trading conditions in recent years, but seems to be rebuilding strongly on the back of an increase in the number of tourists to the city and capturing some major international conferences. Meanwhile, hoteliers in Brussels have supplemented the ongoing demand from regular meetings associated with the Euro Crisis with major events of their own,” said David Bailey, deputy managing director at TRI Hospitality Consulting. 

Mixed results in Europe highlight the impact of revenue mix on profit

A detailed look at the departmental revenue mix of hotels in markets across Europe illustrates the impact of revenue attributed to rooms and ancillary revenues on the profit conversion, according to the latest HotStats survey.

It is widely recognised that the rooms department is the most profitable in the hotel, with hotels in London converting at approximately 80% of rooms revenue to department profit in 2011. In contrast, the F&B department is not nearly as profitable due to the labour-intensive operation and a cost of sales of up to 30% of total revenue.

Whilst the highest TrevPAR levels of the European hotel markets polled were achieved in Paris (€224.18), Rome (€221.78) and Amsterdam (€208.41), the conversion of properties operating in these markets varied greatly.

Whilst hotels in Amsterdam achieved one of the highest TrevPAR levels in April, they were also able to convert profit per room to the highest of the European city markets polled this month at €97.31, equivalent to 46.7% of total revenue.

Whilst hotels in Amsterdam have a more efficient cost structure than either Paris or Rome, primarily due to a greater ability to control payroll levels, this month ancillary revenues accounted for only 23.8% of total revenue, with the remaining 76.2% of total revenue derived from the highly profitable rooms department.

In contrast, ancillary revenues accounted for a higher proportion of TrevPAR in both Paris (29.2%) and Rome (32.4%), which left the properties polled in Paris converting at 30.3% of total revenue, equivalent to €67.93 per available room, and hotels in Rome converting at just 24% of total revenue, equivalent to €53.21 per available room.

A further dissection of the composition of ancillary revenues reveals that food and beverage revenue at hotels in Paris accounts for €52.34 per available room, equivalent to 23.3% of TrevPAR, in Rome it accounts for €58.33 per available room, equivalent to 26.3% of TrevPAR and in Amsterdam, accounts for €37.92, equivalent to just 18.2% of TrevPAR.