Germany is expecting some six million football fans and their friends and family in June, and July, of which many will be foreigners, which should enable the 14.5 million overnight stays recorded in 2005 to be surpassed easily. 

The Football World Cup should generate direct revenue in the region of 800 million euros and a 20% increase in RevPAR in June and July, i.e. four to six points of additional growth in 2006, a rise that is much lower than those generated by equivalent events in other European cities and countries.

Despite an upturn early in the year, average daily rates in Germany remain amongst the lowest in Europe and the organisers of the Cup have imposed a binding commitment to reasonable rates.

Revenue will be more widely distributed over the twelve host cities of the competition. Munich and Berlin hope, nevertheless, to take the lion's share. Yet availability in the major cities, including the German capital, has prompted last-minute offers that are likely to lower hotel rates.

The 18th Football World Cup kicked off in Munich on 9 June 2006, prompting six weeks of media frenzy (a total audience of 28 billion people followed the previous Cup in Korea), heightened by the 15,000 journalists in attendance. Three million spectators will fill the twelve stadiums of the competition, a figure that is likely to double when including the total number of tourists arriving in Germany to participate directly or indirectly in this event.

The German hotel industry has been closely following the performances recorded by the host cities and countries of equivalent major sporting events. In early 2006, Turin recorded a +222.2% increase in RevPar in February alone thanks to the Summer Olympic Games. Greece as a whole benefited from a 137% rise in RevPAR in August 2004 in the midst of the Olympic Summer Games. A little less spectacular, the ‘football effect' enabled Portugal to record an increase in RevPAR of over 70% during the European Championship in June 2004. Eight years ago, the 1998 Football World Cup enabled France to post increases in RevPAR in the region of 30% in June and July.

According to the econometric projections of MKG Consulting, the Football World Cup is set to generate growth in RevPAR of 4 to 6 points in 2006, a lower figure than in France. German hoteliers are being more cautious. With just twenty million international arrivals, Germany is behind its closest European neighbours — France, Italy and Spain.

The tourist authorities and the Organising Committee have cooperated closely to take advantage of this opportunity to give a significant boost to this destination and its hotel activity. 2005 broke all occupancy records, with 14.5 million overnight stays, i.e. a 10.3% increase as compared to 2004, largely prompted by double-figure growth of international visitors. Yet during a twelve-month period, overabundance of supply prompted a price war that lowered average daily rates by approximately 5% and the Football World Cup is set to have little impact on this downward spiral.

Until recently, being a hotelier in Germany was no easy task, with some of the lowest average daily rates in Europe and FIFA, organiser of the Cup, has imposed a binding commitment to reasonable rates in the host countries. To ensure that this commitment is respected, the Federation has put in place the World Cup Accommodation Services (WCAS), a joint venture to organise accommodation and welcome media, sponsors, officials, groups and individuals, with the close participation of the leading hotel groups and trade unions.

In addition, activity of business, conference, trade fair and exhibition tourism has been feeling the effects of the organisation of the Cup, with a significant deferment of activity into the second half of the year, if not 2007.

Yet the ‘Football World Cup effect' should be more widely shared across Germany, as the eight groups of four teams are not limited to one geographical area. Journalists and supporters will have to travel across the country to watch the matches, benefiting from a novel idea:  "Follow your team" packages that adapt to match results. Two cities are set to gain higher direct revenue than other host cities: Munich, headquarters of the international press, and Berlin, which will host the final stages.

The German capital is playing its trump card: despite constant increases in hotel supply in recent years (+20% since five years), occupancy of Berlin hotels appears to be set to increase. In last April, occupancy rates posted a 5.6-point increase surpassing 65.5% and RevPAR was also positive (+3.8%).

Yet just after kick off, countless hotel rooms are still available for last-minute reservations in Berlin. Hoteliers are keen to see the results of their price discounts, which adds further pressure to the fall in average daily rates, particularly for leisure clients.

Report after 19 July.

MKG is the recognised leader in consulting services for the hotel, tourism and restaurant industry and has the largest hotel performance database in the world outside the United States ( www.hotelcompset.com ). In Germany, MKG boasts the largest hotel database with close to 800 participating hotels, covering all hotel segments and key markets. 9 of the leading 10 and 17 of the leading 20 chains participate in hotelcompset.

The benchmarking tools of MKG Consulting enable participants to compare their performances to those of their market or direct competitors.

Since September 2004 MKG Consulting has proposed an enhanced program that enables activity indicators to be monitored on a daily basis. In France this program counts 1,500 hotels and 125,000 rooms, making it the most developed daily performance tracking program in Europe. Further expansion of the daily program to other major countries like Germany is now underway.

For further information, please contact Georges Panayotis on + 33 (0)1 56 56 87 90 georges.panayotis@mkg-group.com or the MKG Consulting Database Department on + 33 (0)1 56 56 87 87 bdd@mkg-consulting.com