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European Budget Hotel Industry Shows Growth in RevPAR; 
Not as Cheerful in the Other Hotel Segments
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November 2003
  • The European hotel industry lost 2.4% in RevPAR in September.
  • The budget hotel industry posted excellent results with rises in RevPAR of 5.0% for the 0*, and 4.8% for the 1*.
  • Steady occupancy in September even for the 4* hotels.


Monthly results for chain hotels per category 
- September 2003 -


Occupancy rate

09/03

Change (pts)
Average room rate 09/03
Change %
RevPAR 09/03
Change %
0*
73,5%
0,9
30,4
3,7%
22,4
5,0%
1*
79,5%
2,4
38,6
1,6%
30,7
4,8%
2*
78,7%
-1,8
76,2
-2,2%
60,0
-4,4%
3*
74,5%
0,7
83,4
-3,6%
62,2
-2,7%
4*
76,2%
0,2
137,1
-1,5%
104,4
-1,3%
Global
75,7%
0,2
103,3
-2,7%
78,1
-2,4%
Source : MKG Consulting Database – October 2003 -
 

12 Months results for chain hotels per category


Occupancy rate

09/03

Change (pts)
Average room rate 09/03
Change %
RevPAR 09/03
Change %
0*
68,9%
2,1
30,0
3,4%
20,7
6,7%
1*
69,2%
-2,9
38,2
2,1%
26,4
-2,0%
2*
69,9%
-2,6
73,9
2,3%
51,7
-1,4%
3*
63,8%
-0,6
81,2
0,2%
51,7
-0,8%
4*
65,1%
-0,8
128,9
-0,1%
83,9
-1,3%
Global
65,0%
-0,9
98,5
0,0%
64,1
-1,4%
Source : MKG Consulting Database – October 2003 -

A highly successful spring season for the budget categories

The European occupancy rates were balanced for September 2003 versus the situation recorded last year. On the other hand, still speaking globally, the average room rates fell by 2.7%. 

Nevertheless, the situation is once again rather different between the various categories. The 0* and 1* categories posted highly positive results. In September, 0* hotels posted a combined rise of occupancy rates (+0.9 points) and average room rates (+3.7%) thus making the revenue per available room rise by 5.0%. Likewise, 1* hotels registered a 2.4-point increase in the occupancy growth rate for average room rates up by 1.6%, the revenue per available room increasing by 4.8%. 

These results are finally in line with the trend observed in recent months. Less exposed to events in the international situation and "refuge" products in the context of reduced budgets, both of consumers as well as businesses, the budget hotel industry plays its role as a "buffer" in the hotel industry during delicate phases in the market. The proof in that, the situation of the 0* category on 12 rolling months indicates occupancy rates on the rise by 2.1 points for average room rates increasing by 3.4%. Thus RevPAR rose by 6.7%. 

This being said, the situation is not as cheerful in the other hotel segments. The month of September will have been more delicate for the 2* and 3* categories. These categories recorded falls in RevPAR of 4.4% and 2.7% respectively. In these two categories, the rate-dropping measures were not able to stimulate the occupancy rate. The 2* hotels lost 1.8 points in occupancy for average room rates down by 2.2%. In that which concerns 3* hotels, the number of guests remains steady, for average room rates down by 3.6%. Reservations made later and later have strongly contributed to the state of things. with the final result often being, unfortunately, similar in terms of the number of guests. Thus, over the past twelve months, the 3* category recorded a loss in RevPAR of 0.8%. 

As for the 4* category, it once again posted a monthly fall, though clearly more moderated than in the previous months (-1.3% for the RevPAR). The slight rise in occupancy rates in September (+0.2 points) is an encouraging sign. It was nevertheless not accompanied by a rise in average room rates (-1.5%). Another positive sign for the European 4* category, on twelve rolling months the drop in revenue per available room was only 1.3%; the trend is definitely improving.

Monthly results for chain hotels per country
- September 2003 -


Occupancy rate

09/03

Change (pts)
Average room rate 09/03
Change %
RevPAR 09/03
Change %
GERMANY
70,4%
1,0
83,5
-7,6%
58,8
-6,3%
AUSTRIA
85,4%
9,8
94,2
8,4%
80,4
22,5%
BELGIUM
77,5%
1,0
95,5
-2,5%
74,0
-1,2%
IITALY
75,1%
-0,7
125,5
-1,6%
94,3
-2,4%
NETHERLANDS
74,9%
-6,3
111,1
-5,5%
83,2
-12,8%
UK
80,5%
2,4
129,3
0,1%
104,1
3,1%
SPAIN
77,8%
2,3
80,3
-2,6%
62,4
0,3%
PORTUGAL
74,3%
-2,4
93,1
0,2%
69,2
-3,0%
FRANCE
76,4%
-2,1
75,5
-0,5%
57,6
-3,1%
Source : MKG Consulting Database – October 2003 -

Austria is a good surprise…and an example to follow

Among the deceptions, suffering from a fragile economy mainly due to the drop in household consumption and commercial trade (with the United States and Germany as major partners), the Netherlands are stuck in a steep downward trend. In September, the revenue per available room lost 12.8%, resulting from a combined drop in the occupancy rates and the average room rates of 6.3 points and 5.5 % respectively. Within such a context, it is not surprising to see that, in an attempt to save their market shares, Dutch hoteliers engaged in substantial rate cuts; The situation in recent months being quite similar, with a drop in the occupancy rates of 5.8 points for a downward-oriented average room rate (-2.8%).

In France, the decrease of the international clientele and the fact that the customers are more concerned with their budget has contributed to the French decrease of RevPAR : -3,1% in September. On the same period, the 4* hotels lost 15,8% of RevPAR. On the other hand, budget hotels posted a RevPAR increase over 4% !. On twelve rolling months, the low categories have largely contributed to the French Hotel industry equilibrium : +0.3% of RevPAR.

The immediate results showing a mid-term drop in RevPAR of 10.6%.

On the contrary, the excellent surprise of the spring season is Austria, which posted a RevPAR up by 22.5% versus September 2002. This beautiful performance is to be attributed to the combination of the hike in average room rates: +8.4% and the occupancy rates (+10 points). Profiting from the large hike in demand, Austrian hoteliers have shown opportunism by optimizing the revenue per available room to the maximum. The promotional actions taken by the Austrian should be a source of inspiration for their fellow European hoteliers.

Methodology
This study is based on a sample of 6,000 corporate operated chains in Europe, representing 600,000 rooms. The data, gathered monthly from each hotel, is redressed according to the segmentation of the corporate operated hotel chain supply, and by the weight of each country in the European Union. .

MKG Consulting has the largest hotel database in the world outside the USA, with the best representation of all the hotel segments.

Contact:

Georges Panayotis
+33 (0)1 56 56 87 90
bdd@mkg-consulting.com
http://www.mkgconseil.com

 
Also See: European Hotel Chains: New Downward Slide in July, 2003 / MKG Consulting / Sept 2003
Finally a Month of Strong Rises in the German Hotel Industry / MKG Consulting / July 2003
Hotel Industry in Europe: Record Drop in the RevPAR in April 2003, But Slight Decrease of the Mid-term Trend / MKG Consulting / May 2003
The Worldwide Ranking of Hotel Groups 2003; The World’s Top Ten International Groups Increase Their Supply by 2.6% / MKG / April 2003
The French Hotel Industry Confirms its Solidity in 2002 and Serenely Forecasts a Year 2003, Despite Geopolitical Instability / MKG Consulting / Feb 2003
European Hotel Industry: Like Last Year, France is Doing Better than all its European Neighbours in 2002 / MKG Consulting / Jan 2003
European Hotel Industry: An Encouraging Month of October / MKG Consulting / Dec 2002
Europe’s Hotel Industry: France Posts Record Performance for September, 2002 / MKG Consulting / Oct 2002
Assessment of the Summer Season for the European Hotel Industry / MKG / Oct 2002


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