The performance of the European hotel industry continued to improve during the first quarter of 2001 with many markets reporting positive rooms yield growth.  Across the whole of Europe rooms yield grew 6.1 percent to reach €70.  Growth was fuelled by a 4.7 percent improvement in average room rates combined with a 1.3 percent increase in occupancy.  

The impact of the foot-and-mouth crisis in the UK, which started in February, does not appear to have significantly impacted the performance of hotels in our survey during the first quarter of 2001.  There was a marginal fall in UK market occupancy in March, but this was offset by a greater advance in room rates, resulting in an increase of 3.7 percent in rooms yield for the month when measured in sterling.  Results for the first quarter of 2001 show that increases in both occupancy and average room rate across the UK have pushed rooms yield up by 6.4 percent over the first quarter of 2000.  The impact of the foot-and-mouth crisis in the UK and the Netherlands may not be fully reflected in overall market performance until April and May.  There appears to be no doubt however, that for smaller, rural establishments, which are highly dependent on tourism, a decline in performance has already occurred. 

Across Europe it is noticeable that many cities experienced a decline in occupancy in March, the first sign perhaps of the impact of the US slowdown on visitation to Europe, and exacerbated by the apparent misunderstanding of the implications of foot-and-mouth.  This assumption is supported by the latest BAA numbers for April, which reveal a 3.6 percent fall in arrivals at Heathrow airport to 5.2 million, and a fall in US passengers of 7.4 percent.  Despite the occupancy decline, average rates have held up across Europe, with the overall average rate at €116, up 4.8 percent.  As a consequence, many markets have continued to witness double-digit rooms yield growth in both March and for the year-to-date. 

Commenting on the findings, Julia Felton, who heads Hospitality Knowledge Services at  Andersen and is based in London, said:  �Despite the adverse trading conditions during the first quarter of the year, the European hotel industry has continued to experience rooms yield growth ahead of inflation. The next few months will be crucial, as early indications are that the industry may have been harder hit in April due to the effects of foot-and-mouth curtailing some of the typical Easter demand, particularly in the UK.  May will also be a key indicator for hoteliers as to what the year ahead holds.�

Whether US tourists continue to stay away from Europe will depend as much on the overall state of the US economy as to effective publicity that there are no health and safety issues following the foot-and-mouth outbreak.  With the US dollar strong relative to both sterling and the euro, and transatlantic airfares some of the cheapest in years, Europe continues to be a very attractive destination. 

Launched in 1996, the Andersen Hotel Industry Benchmark Survey comprises information gathered from more than 4,500 hotels in 200 markets across 140 countries.  The survey currently tracks hotel performance everywhere outside the Americas.  

Andersen is a global leader in professional services. It provides integrated solutions that draw on diverse and deep competencies in consulting, assurance, tax, corporate finance, and in some countries, legal services. Andersen employs 85,000 people in 84 countries.