The hotel industry in the Benelux is still operating in the shadow of the economic crisis.

The new HOSTA 2012 report from Horwath HTL shows that the occupancies and average room rates increased in 2011, but are still well below the results achieved before the crisis. The current economic downturn also has a negative effect on the outlook for 2012.

The Netherlands: hotel rates are under pressure

The research by Horwath HTL shows that in The Netherlands, the occupancy increased from 65.1% to 67.2%. For the first time since 2007, the average room rate increased as well, from € 93 to € 98. The results however are still below the level of 2007, before the economic crisis, when the occupancy was 72.5% and the average room rate was € 110.

For 2012 and 2013, a very modest growth is projected. Both the occupancies and the average room rates are expected to increase by 1% per year. With these projections, the hotel industry in 2013 will still not be at the level of the first crisis year 2008, let alone the level of 2007.

The five star segment performed reasonably well in 2011. The occupancy increased to 68.8%, higher than the average of the other star categories in the Netherlands. The average room rates in the top segment increased as well. Because of this, the five star hotels are the only star category that came near the pre-crisis levels in 2011. For 2012 however, the five star hotels are less positive. The recovery of the occupancy is expected to slow down. For the average room rate, a small decrease is expected.

Ewout Hoogendoorn, director of Horwath HTL Benelux: "More than any other segment, the five star hotels are strongly dependent on the international economy. Both economic recoveries and economic downturns are first visible in the five star category."

In Amsterdam, where more than 50% of the five star hotels in the Netherlands are located, the market is under pressure because of the arrival of a number of new top hotels, including the recently opened Conservatorium Hotel and the Waldorf Astoria hotel planned for next year. Additionally, the increase in the four star market adds pressure to the rates in the five star hotels. For instance, the new Room Mate Hotel (currently under construction) offers hotel rooms with five star sizes at four star rates. 

Belgium & Luxembourg: higher occupancies and average room rates

In Belgium & Luxembourg, the occupancy level increased from 68.1% in 2010 to 69.3% in 2011, an increase of 1.2 percentage points. The average room rates increased by 1.1%, from € 90 to € 91.

The higher occupancies in 2011 were achieved due to an increase in the tourist market. The relative number of business guests decreased slightly, but the number of individual tourists increased, particularly domestic tourists. The number of hotel guests from countries such as Great Britain, Spain, the United States and the Middle-East decreased.

Hotel managers in Belgium and Luxembourg expect a further increase in 2012, with an occupancy of 72.0% and an average room rate of € 92. As in the Netherlands, these results are still well below the level of 2007. This shows that the hotel industry has not yet recovered from the financial crisis, which caused strong decreased in hotel occupancies in 2008 and 2009.

Increased power of online travel agents

The number of bookings through third party websites, such as Booking.com and Expedia, increased again in 2012. The number of bookings through hotel and hotel chain websites stabilized. The market share of third party websites is now more than twice the market share of hotel websites and hotel chain websites.

Because of the rapid growth in the number of bookings through third party websites over the past decade, the bargaining position of these websites has increased. The ranking of hotels offered through these websites is often decided by the percentage of commission the hotel is willing to pay. If a hotel wants to maintain a position on the first page, the commission can be 15% to 20%.

Due to the high commissions, the profitability of the hotels is threatened. In the Netherlands, the average room rate of € 98 was needed to cover € 37 in direct costs (reception, housekeeping, laundry, etc.). On average, 5% commission was paid, resulting in € 51 per room sold for overhead and housing costs. The average income before fixed charges was 35.9% in 2011.

The income from bookings through third party websites such as Booking.com and Expedia is much lower. On the one hand the rates are lower, because hotels are competing directly and because the websites demand rate parity, meaning the rates cannot be higher than those offered on other websites. On the other hand the commissions can be up to 20%, especially if the hotel wants a good ranking.

Marco van Bruggen, senior consultant at Horwath HTL Benelux: "Because the personnel and housekeeping costs remain the same, the resulting income from a hotel room goes down to almost zero." The situation becomes even less attractive when regarding auction sites, which often result in very low rates, or sites as Groupon which charge 50% commission. Bookings through these sites often result in a loss for the hotel, which it must try to recover in restaurant and other revenues.

Results per region

The table below gives an overview of the results per country and region.



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