Despite having the lowest occupancy - the chain hotels in Moscow were the most profitable in Europe in 2007, according to the full-year figures from TRI Hospitality Consulting's European HotStats service.

Each room in the Moscow hotels in the sample generated, on average, Eu140.01 of profit per day during 2007.

This was significantly more than the Eu117.77 per room in London, the second most profitable city in the survey.

However Moscow's room sales performance only put it in fourth place with average daily revenue per available room of Eu137.86.

"Moscow makes by far the most money for hoteliers and yet, on sales alone, it appears to be doing worse than Paris, London and Amsterdam. Relying on room revpar figures alone means hoteliers, investors and developers would have only a partial – and distorted – picture of true performance," said David Bailey, deputy managing director, TRI Hospitality Consulting.

The revpar figures are also misleading when it comes to the relative merits of Paris and London. Paris put in the best room sales performance in 2007 with average daily revpar of Eu174.88 compared to London in second place with Eu166.26. But profitability in Paris was lower, at Eu96.09 compared to the Eu117.77 achieved in London.

Moscow and Budapest have the emptiest hotels

Moscow had the lowest average occupancy of the year at 67.7 per cent, while Budapest filled second lowest place with occupancy of just under 70 per cent. London was in top place with occupancy of 84 per cent.

"The distinct lack of leisure guests in the Russian capital means that we don't expect average occupancy to exceed 70 per cent in 2008 either. But hoteliers will continue to push rates upwards because of the extremely strong corporate demand for a limited number of branded hotels. Travel procedures and costs would need to become more tourist-friendly to attract a higher volume of leisure guests," said Bailey.

In December the extraordinary 309.1 per cent increase in Budapest's profit performance was caused by some hotels in the sample being closed for refurbishment during the same month a year earlier.

But this freak increase had no effect on the full-year figures which showed Budapest had the lowest profit in the survey with IBFC at Eu36.50 per available room. 

Paris has highest profit growth in 2007

Paris hoteliers increased their profits more than any other city in the survey. At 27.6 per cent, profit growth in the French capital was far ahead of Moscow in second place with IBFC PAR up by 16.8 per cent and Vienna in third place with an increase of 16 per cent.

Yet this strong growth was hampered by relatively high staffing expenses, putting Paris's actual profit performance in third place behind Moscow and London. 

Although Paris's hoteliers also managed to push down payroll costs by the largest margin in the survey - 2.8 percentage points – they still had the second highest overall payroll percentage at 36.2 per cent of total revenue. In contrast, Moscow had the lowest wage costs in 2007 with payroll accounting for 20.3 per cent of total revenue.

"Wage costs are a crucial factor in the overall profitability of a service-intensive industry such as hotels. Keeping costs to a minimum at the same time as motivating staff is the tricky balancing act that successful managers must perform," said Bailey.