Brussels’ Hotels Performing Better Than Other European
Cities in the Fallout in Global Travel
Jones Lang LaSalle Hotels Updates Digest Europe Report
London, 6th December 2001 — Brussels’ hotels have performed better than many other European cities in the wake of the fallout in global travel following the events of September 11th.
The Brussels hotel market has been one of the least affected European hotel markets, with room rates holding up to date. Occupancy rates, similar to most markets have fallen during the months of September and October as non-essential travel was cut and leisure demand cancelled across the world. The month of September saw occupancy levels in quality hotels fall by 11.8% to 76.1%, whilst October saw a further slide of 14.7% to 66.7%. By comparison Paris, Rome, Milan, London, Budapest and Berlin all saw falls in excess of 20%.
Despite this, Richard Eaton-Hart, Senior Vice President at Jones Lang LaSalle Hotels, points to the stability in hotel room rates compared to other major European cities which are witnessing up to a 15% fall in average rate. Quality hotel room rates in Brussels fell by only 0.8% to €130.41 during the month of September. Again the drop in October was limited to 0.5% to €118. He attributes this to Brussels’ lesser reliance on the US sector. “Quality hotels in Brussels source only around 15% of total demand from the US market, compared to 45% in London, 35% in Paris and Rome and 24% in Amsterdam. Thus the city has not taken such a hit from one individual market”.
Instead the bulk of hotel demand is sourced from corporate and EU related demand from a wide range of European countries. “Whilst travel in the days immediately following the events of September 11th halted, business travel has resumed over the past seven weeks. Of course there are concerns about the economic situation across the EU and both the business and conference sectors are likely to be subject to cost cuts. However, Brussels has not felt the double impact of a slowdown in US business and leisure travel, due to its limited exposure” added Mr Eaton-Hart.
In addition, 2000 was a particularly strong year for Brussels’ hotels. The city played host to the European Football Championships in June 2000 which served to boost occupancies and thus the falls in occupancy may be exaggerated somewhat. The city’s convention centre had a strong book of business in 2000, which was expected to slow somewhat in 2001 due to the cyclical nature of large conferences and meetings.
Brussels’ performance is in stark contrast to Europe’s gateway cities of London and Milan which saw a 37% and 32% fall in RevPar (luxury hotels) during the month of October. Other markets to see significant falls in the wake of the terrorist attacks were Rome, Munich, Amsterdam, Budapest, Berlin and Dublin.
2001 has seen strong investor interest in the Brussels market with several deals concluding. In April Deutsche Immobilien Fonds AG (DIFA) purchased the five star, 281 room Radisson SAS for €85m, representing the fund’s first hotel acquisition outside of Germany. This was followed by Hoteles Catalonia’s purchase of the 78 room Hotel Forum Art for €6.6m (including an amount for renovation costs). In June Bannimo Real Estate sold the 262 room Swissotel to the Belgian company City Hotels SA for around €40m.
“Looking forward, whilst EU related business is likely to remain strong, the performance of Brussels’ hotels may come under increasing pressure given the current weakness of the convention and conference market, which accounts for a significant amount of room night demand, as well as the current uncertain economic climate. Non-essential travel has already been cut and budgets are being set for next year in the context of the current economic uncertainty” concluded Mr Eaton-Hart.
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|Also See||Impact of September 11, 2001 Varies for Global Hotel Investment Markets / Jones Lang LaSalle Hotels / Nov 2001|