The hotel industry is the only sector to have declined in productivity over the last years, positioning it last in an index prepared by NTC Research for Deloitte.

The Deloitte productivity index records changes in output per head for European businesses based on employment and activity levels. An index of 50.0 represents no change in productivity, with scores above that mark demonstrating an increase and scores below indicating a decline in productivity (see notes to editors).

The hotel industry scored 49.9 over the four years, with little fluctuation over that period. The sector's highest level of productivity growth was recorded in 2000, at 53.1, with the lowest rate in 2001, 48.2. However, since 2001 the decline in productivity growth has eased slightly, with an index of 49.7 recorded in 2003.

Marvin Rust, hospitality managing partner at Deloitte, commented: "In difficult economic conditions hotels face a greater challenge than other sectors to boost productivity due to their high fixed costs. After the recession in the early 1990s, the hotel industry implemented some radical restructuring measures to address this issue with the result that it has been hard for the industry to show further employee productivity gains over the last four years.

"At the luxury end of the market, hoteliers cannot adjust staff levels without sacrificing service so to boost output per head, hoteliers must focus on improving efficiency, such as through the use of more advanced technology and systems to generate more room nights cost effectively.

"As international travel picks up, we should see a significant increase in hotel productivity, as occupancies and room rates increase while staff numbers remain relatively stable. However, hoteliers should continue to find new ways to improve efficiency, particularly as the outlook for the market as a whole remains uncertain."

Paradoxically, the index' top ranked sector was the airline industry, which averaged a score of 56 in the four years to January 2004.

Paul O'Neil, Deloitte's aviation leader, commented: "In 1999 European airlines were already responding to poor long-term performance, with CEOs beginning to fight unions to reduce costs, which is reflected in the positive productivity index of 52.7 recorded in 2000.

"Productivity growth surged to nearly 57 in 2001 as the events of September 11th galvanised management to negotiate the staffing cuts that had been necessary for some time. Indeed significant drops in international travel were only evident for a few months, which allowed output per head to increase as the staff reductions took effect. The impact of restructuring was more fully apparent in 2003, with productivity growth recorded at 62.5 in January 2004.

"With airline revenues beginning to show signs of recovery but staff levels still low, productivity growth is expected to continue rise further in the months ahead."

Deloitte's Productivity Index is derived from data collected from NTC Research's Purchasing Managers' Index (PMI) surveys of business conditions across Europe. The research covers a cross-section of businesses in each sector, with each firm providing data on employment and activity/output levels, which is analysed by NTC to produce the rate of change of productivity. The information Is weighted together according to the individual country's contribution to the gross value added of that sector at the EU level. This figure is then seasonally adjusted. The sectors are then weighted together to form the EU Total Productivity Index.

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The information contained in this press release is correct at the time of going to press.