NATO Summit drives huge profit growth for Brussels hotels, hotels in Rome coming back down to earth after holy year high, North East UK hoteliers caught out by creeping costs and Cairo hotels thriving on the back of Egypt’s economic resurgence.

Hotels in Brussels recorded a 116.8 per cent year-on-year increase in profit per room this month, as a result of the Belgian capital hosting the NATO Summit, according to the latest data from HotStats.

The staggering year-on-year increase in performance was led by an 18.7 percentage point uplift in room occupancy, to 75.1 per cent.

Whilst more measured, the 3.0 per cent increase in achieved average room rate, to €144.28, helped fuel the 37.2 per cent increase in RevPAR (Revenue per Available Room) for the month, to €108.37.

This strength of demand in Brussels enabled hoteliers to drive top and bottom line performance to some of the highest levels recorded since the terrorist activity in the Belgian capital in March 2016.

In addition to the increase in Rooms Revenue, hotels in Brussels successfully achieved an increase in Non-Rooms Revenues, including Food and Beverage (+23.2 per cent) and Conference and Banqueting (+26.4 per cent), which fuelled a TrevPAR (Total Revenue per Available Room) increase of 28.9 per cent to €148.77.

Whilst the strong top line performance enabled hoteliers in Brussels to record a 7.3 percentage point reduction in payroll levels, at 42.7 per cent of total revenue, this cost still remains high against the European average of 28.9 per cent. As a result, and in spite of the staggering year-on-year increase, profit conversion at Brussels hotels remains relatively low at 26.6 per cent of total revenue this month.

Hotels in Rome Coming Back Down to Earth After Holy Year High

Further to the standout performance of hotels in Rome in 2016 due to the Jubilee or Holy Year of Mercy, profit levels are realigning, illustrated by the 12.3 per cent year-on-year decline in profit per room this month.

By this time last year, it was estimated that 9.1 million people had made the pilgrimage to Rome to celebrate the Jubilee and the swathes of visitors enabled hotels in the Italian capital to leverage average room rate and enjoy an uplift in Non-Rooms Revenues.

However, RevPAR performance this month has fallen by 11.5 per cent as a result of a 3.4 percentage point decline in room occupancy as well as a 7.9 per cent drop in achieved average room rate, to €224.56.

In addition to the drop in RevPAR, declining revenue in Non-Rooms Departments contributed to a 6.5 per cent drop in TrevPAR to €287.36.

Whilst hotels in Rome have been able to successfully modify costs to account for the falling revenues, illustrated by the savings this month in Payroll (-0.7 per cent) and Overheads (-5.3 per cent), the adjustment was not sufficient to offset the decline in revenue, and as a result profit per room fell to €107.63.

Exceptional Occupancy Enables Warsaw Hoteliers to Leverage Rate to Drive Profit
Hotels in Warsaw recorded a 17.1 per cent increase in achieved average room rate this month which fuelled a 23.4 per cent increase in profit per room, as hoteliers were able to leverage rate on the back of room occupancy levels of +80 per cent.

The strength of demand enabled hotels in Warsaw to achieve considerable rate growth across all market segments, including Best Available Rate (+14.5 per cent), Residential Conference (+26.1 per cent), Corporate (+8.4 per cent), Individual Leisure (+30.9 per cent) and Group Leisure (+17.3 per cent).

Furthermore, increases were recorded in Non-Rooms Departments, including Food and Beverage (+8.8 per cent) and Conference and Banqueting (+17.7 per cent). As a result, TrevPAR at hotels in Warsaw increased by 12.7 per cent year-on-year, to €141.35.

Payroll at hotels in Warsaw remains amongst the lowest in Europe, at just 21.5 per cent of total revenue, following a 1.6 percentage point reduction this month. The meagre payroll levels contributed to a profit conversion at a staggering 49.6 per cent of total revenue this month.

MENA Chain Hotels Market Review

Buzzing Bristol Hotels Outpacing Profit Growth Across Regional UK

Hotels in Bristol recorded a 19.8 per cent increase in profit per room this month, which is more than double the growth in the Provincial UK as the city buzzed with activity, according to the latest data from HotStats.

Whilst hotels polled in both Bristol and the Regional UK recorded an 8.2 per cent increase in RevPAR (Revenue per Available Room) for the month, at £90.07, the achieved rate at hotels in the South West city was more 5.1 per cent above the Regional performance (£85.70).

Robust increases in top line performance were helped by year-on-year growth across most market segments and bolstered by a range of events, including the 3rd largest 10k race in the UK, with 13,000 participants, the ‘Love Saves the Day’ festival and VegFest, which all contributed to the 2.7 percentage point increase in room occupancy and the 4.5 per cent year-on-year increase in achieved average room rate.

However, it was via cost cutting measures that Bristol hoteliers have shown themselves to be most shrewd, illustrated by their ability to convert a 7.7 per cent increase in TrevPAR (Total Revenue per Available Room) to a 19.8 per cent increase in profit per room. This is compared to the 8.5 per cent increase in profit per room at the overall Provincial UK market, on the back of a 5.9 per cent increase in TrevPAR.

The astute cost cutting was further exemplified by the 2.3 percentage point year-on-year drop in payroll this month, which fell to 29.0 per cent of total revenue and helped to drive a 35.3 per cent profit conversion.

Huge Occupancy Growth for Aberdeen Hotels Fails to Reach the Bottom Line

Despite recording a 6.5 percentage point year-on-year increase in room occupancy this month, hotels in Aberdeen still suffered a 2.8 per cent decline in profit per room.

Whilst the significant increase in room occupancy this month, to 72.0 per cent, was almost entirely wiped out by an 8.7 per cent decline in achieved average room rate, to £61.85, Aberdeen hoteliers clung on to achieve a 0.4 per cent increase in RevPAR, to £44.55. 

Due, in part, to the uplift in volume, TrevPAR at hotels in Aberdeen increased by 1.7 per cent year-on-year, to £71.06, helped by a 4.5 per cent increase in Food & Beverage revenue per available room, to £20.80.

However, the positive TrevPAR story this month belies the continuing challenges to profitability, which begin in the Rooms Department, where Rooms Cost of Sales increased by 14.8 per cent year-on-year, to £3.87 per available room, equivalent to 8.9 per cent of Rooms Revenue.

In addition, with a 3.7 per cent increase in Rooms Payroll and a 10.3 per cent increase in Rooms Expenses, it is unsurprising that Rooms Department Profit dropped by 3.0 per cent year-on-year, to £29.26.

Overall, profit per room at Aberdeen hotels fell to £17.57 this month, which was in spite of a 0.4 percentage point saving in total Payroll, to 33.0 per cent.

North East Hoteliers Caught Out by Creeping Costs

Profit per room at hotels in the North East declined by 4.8 per cent this month due to increases in key costs, including Payroll (+2.6 per cent) and Overheads (+2.8 per cent) on a per available room basis.

The decline was in spite of a 1.1 per cent increase in RevPAR as hotels in the region benefited from a 2.2 percentage point increase in occupancy, which offset the 1.7 per cent average room rate decline, to £73.52.

The decline this month is in contrast to the reasonably strong start to the year for hotels in the North East, illustrated by the 3.7 per cent year-to-date increase in RevPAR, which contributed to the 2.6 per cent year-to-date increase in profit per room.

However, HotStats data suggests that the achieved average room rate at hotels in the North East is under pressure, with declines this month recorded across key segments, including Best Available Rate (-6.3 per cent), Corporate (-0.9 per cent) and Leisure (-3.8 per cent).  

MENA Chain Hotels Market Review

Cairo Hotels Thriving on the Back of Egypt’s Economic Resurgence

Hotels in Cairo recorded a 42.4 per cent year-on-year increase in profit per room this month as the city’s hoteliers enjoy a well-earned resurgence in line with the economic recovery of Egypt, according to the latest data from HotStats.

The Egyptian economy is forecast to be one of the strongest growing in the MENA region in 2017 and has been bolstered by a $12 billion loan from the IMF which has reignited investor confidence.

Whilst room occupancy at hotels in the Egyptian capital plummeted by 8.9 percentage points, to 63.6 per cent this month, this was more than offset by the 72.5 per cent increase in achieved average room rate to $97.51, which fuelled a 51.3 per cent year-on-year RevPAR (Revenue per Available Room) increase, to $62.02.

However, although year-on-year growth in Non-Rooms Departments helped drive a TrevPAR (Total Revenue per Available Room) increase of 39.0 per cent this month, the potential profit growth was impacted by cost increases, including Payroll (+36.8 per cent) and Overheads (+30.6 per cent) on a per available room basis.

That said, as a result of the robust top line performance, profit conversion at Cairo hotels remains strong, at 53.3 per cent of total revenue, which is well above the average for the MENA region at 36.7 per cent.

Jeddah Hotels Cut Costs to Drive Profit

Despite recording a 0.7 per cent year-on-year decline in RevPAR this month, cost savings helped hotels in Jeddah achieve a 3.2 per cent uplift in profit per room.

Whilst hotels in the Saudi Arabian resort successfully recorded a 3.0 per cent increase in achieved average room rate this month, to $353.94, this was cancelled out by a 3.0 percentage point decline in room occupancy, to 81.8 per cent.

The resultant drop in RevPAR this month was the ninth consecutive month of year-on-year RevPAR decline for hotels in Jeddah and contributed to the 15.9 per cent drop in this measure for year-to-date 2017.

Declining Non-Rooms Revenues added to the anguish, with a year-on-year drop recorded in Food and Beverage (-3.8 per cent) and Conference and Banqueting (-19.3 per cent) on a per available room basis, which contributed to the 1.6 per cent fall in TrevPAR, to $438.55.

However, due to cost savings in both Payroll (-7.4 per cent) and Overheads (-3.1 per cent), hotels in Jeddah successfully achieved their first month of year-on-year growth in profit per room in 2017, to $235.96.

Non-Rooms Revenues Prop Up Profit Levels at Riyadh Hotels

Whilst hotels in Riyadh recorded only a 2.7 per cent increase in RevPAR this month, strong growth across Non-Rooms Departments fuelled an uplift in both TrevPAR and GOPPAR for hotels in the Saudi capital.

The growth in RevPAR at hotels in Riyadh was due to an increase in both room occupancy (+1.3 percentage points) and achieved average room rate (+0.6 per cent) and enabled hotels to achieve their first year-on-year increase in RevPAR since the start of 2017.

However, it was in Non-Rooms Revenues where hotels really demonstrated a stand out performance, with significant year-on-year growth recorded in both Food and Beverage (+34.5 per cent) and Conference and Banqueting (+91.7 per cent) revenue on a per available room basis.

The growth in ancillary revenues helped to prop up TrevPAR at hotels in Riyadh, which was recorded at +13.8 per cent, to $252.53.

And thanks to further cost savings, hotels in Riyadh were able to achieve a 29.0 per cent increase in GOPPAR (Gross Operating Profit per Available Room). This is the first time that hotels in the Saudi capital have achieved a year-on-year monthly profit increase for at least 12 months. That said, profit conversion at Riyadh hotels remains robust at 49.4 per cent of total revenue.