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RevPAR Falls 2.9% for the European Hotel Industry
for 12 Months through November 2003; 
Austria Rises 6.1% in RevPAR
.
January, 2004
  • Only an overall drop of 2.9% in RevPAR within the European Union, at the end of November 2003, despite the accumulation of unfavourable factors.
  • Austria (+6.1%), the United Kingdom (-0.5%), and Italy (-1.8%) are at the top of the European podium.
  • France is added to this classification with a performance of -2.5% in RevPAR over the last 12 months. 
  • The budget categories once again show tough resistance. 


Cumulative Results Over the Last 12 Months in the Chain Hotel Industry
at the End of November 2003 
By Country and All Catergories Combined

Country
Cumulative occupancy rate: end of November 2003 
Change 

11-03 / 11-02

Cumulative average room rate: end of November 2003
Change 

11-03 / 11-02

Cumulative RevPAR: end November 2003
Change 

11-03 / 11-02

Germany
58.0%
0.0
75.9
-3.5%
44.0
-3.4%
Austria
68.2%
1.7
83.1
3.5%
56.7
6.1%
Belgium
63.5%
-2.0
85.0
-1.9%
54.0
-5.0%
Italy
62.8%
-1.6
118.2
0.7%
74.3
-1.8%
the Netherlands
65.5%
-5.5
98.1
-4.5%
64.3
-11.9%
the United Kingdom
71.9%
-0.3
122.6
0.0%
88.1
-0.5%
Spain
66.1%
-1.9
90.3
-2.5%
59.7
-5.2%
Portugal
66.1%
-1.6
74.4
-0.8%
49.1
-3.1%
France
66.1%
-2.8
70.1
1.6%
46.3
-2.5%
European Union*
65.4%
-1.4
92.4
-0.7%
60.4
-2.9%
Source: MKG Consulting Database – December 2003
Official chain hotel statistics
The average room rates and RevPAR are given in euros (incl. VAT) 
* including countries not mentioned here

Cumulative Results Over the Last 12 Months in the Chain Hotel Industry
at the End of November 2003
By Category - European Union

Country
Cumulative occupancy rate: end of November 2003 
Change 

11-03 / 11-02

Cumulative average room rate: end of November 2003
Change 

11-03 / 11-02

Cumulative RevPAR: end November 2003
Change 

11-03 / 11-02

0*
72.0%
-3.0
27.6
6.2%
19.8
2.0%
1*
71.0%
-2.1
36.3
5.0%
25.8
1.9%
2*
68.5%
-2.2
65.5
2.3%
44.9
-0.9%
3*
63.4%
-0.9
85.2
-1.2%
54.0
-2.5%
4*
64.8%
-1.4
131.3
-1.6%
85.0
-3.7%
Overall
65.4%
-1.4
92.4
-0.7%
60.4
-2.9%
Source: MKG Consulting Database – December 2003
Official chain hotel statistics
The average room rates and RevPAR are given in euros (incl. VAT)

Among the major points of the year, the most significant were: 

Over the last 12 months, the RevPAR of the European fell by 2.9% 

Due to a drop in the average room rates by 0.7%, and in the occupancy rates by 1.4 points, the overall RevPAR recorded a fall by 2.9% for the European Union at the end of November 2003 over 12 rolling months. Within the context of a growing supply (reminder: +3.7% in 2002 vs. 2001), the several unfavourable events that occurred this year : the war in Iraq, the SARS epidemic, a dollar steeply down versus the Euro, American and Asian customers little inclined to embark on long-distance trips, and a large slowdown in economic activity.

Consumers, by increasingly preferring to make last-minute reservations, notably via internet sales channels, have also contributed to the reduction of the visibility of operators in the sector.

The upmarket hotel industry suffered the most from these events (-3.7% in RevPAR). The drop in the average room rate, observed in the 3* and 4* categories, is a result of two factors: Sales policies have often been more flexible and have allowed rates to be negotiated downward on the traditional business mix of these properties. The other factor: the opening of distribution channels that look to attract new customers. This has led to a modification of the customer mix, with a greater proportion of segments offering lower rates (groups, tour operators).

The European budget categories show strong resistance, thanks to the rise in average room rates 

In that which concerns the budget categories, even though the occupancy rates show greater drops than in the 3* and 4* categories, the adjustment of the average room rates, very clearly oriented upward, has assured maintaining or increasing RevPAR. 

The hard-budget (0* and 1*) hotel industry notably posted a positive change in RevPAR at the end of November 2003 of 2.0% and 1.9% respectively, thanks to continued large increases in average room rates (+6.2% for 0* hotels, and +5.0% for 1* hotels). With a drop in RevPAR of 0.9%, the 2* hotels ended the year at equilibrium versus the preceding fiscal year.

These segments rely on continually present domestic customers. The occupancy rates reach 68.5% in the 2* category, 71.0% in the 1*, and 72.0% in the 0*, despite a significant rise in the supply in recent years.

Austria is within an improvement phase, while the United Kingdom remains steady

An optimistic breeze has been felt in the Austrian hotel industry in 2003. After a difficult 2002 (-4.7% in RevPAR), Austria quickly changed directions and posted an excellent rise of 6.1% in RevPAR. The occupancy rates (+1.7 points) and the average room rates (+3.5%) are growing well.

In the United Kingdom, the performance of the hotel industry has maintained steady revenue per available room, slightly down by 0.5%. A fall of only 0.3 points in occupancy accompanies average room rates that have remained stable from one year to the next. The levels of occupancy rates in the United Kingdom remained particularly high and steady that year. 

To the contrary, the Netherlands have recorded the largest fall in activity in the European Union, since the revenue per available room lost 11.9% versus the previous year over the same period.

The German hotel industry, for which the RevPAR has already lost 5.2% in 2002, should finish this year once more on the decline. However, this degradation should not be as pronounced as it was in 2002: it appears to have gained ground at the end of the year. At the end of November, the revenue per available room over 12 rolling months recorded a 3.4% fall. After results that were strongly down at the beginning of the year (-27.4% in RevPAR in April 2003 versus April 2002), a recovery in activity seems to be the case in recent months. The German corporate chain hotel industry nevertheless remains marked by particularly low occupancy rates.

France, at the top of the European roster in 2002, comes in at 4th place this year in terms of RevPAR 

France has seen a fall in revenue per available room by 2.5%, despite a rise in average room rates of 1.6%. The occupancy rates are down by 2.8 points. However, these results are better than they appear. In 1991, year of the first war in Iraq, which constitutes a reasonable point of comparison with regards to the current situation, French hoteliers recorded a drop in RevPAR of more than 9%.

Similar to the situation seen in Europe, the budget and hard-budget hotel industry in French plays the role as a "buffer". Revenue per available room in the 0* and 1* categories thus rose by 1.6% and 2.3% respectively in France. These categories, much less affected by the changes in the economic situation and international events, have allowed softening the economic blows experienced in 2003. The events which have been making the headlines this year have very significantly penalized the 4* French hotel industry, which saw its RevPAR plummet by 12.7% over 12 rolling months at the end of November 2003. 

An end-of-year showing improvement

After seeing a highly agitated start to the year, and a mediocre summer season, European hoteliers may end the year on a drop in RevPAR situated around 3%.

Budget hotels will have done well, by relying on ever-present domestic customers. On the midmarket and upmarket segments, multiple sales actions taken by hoteliers will have certainly resulted in their finishing the year with less pronounced drops in occupancy rates than the previous year.

The light at the end of the tunnel is almost at hand, all the more so since economists forecast a recovery for 2004. Two large uncertainties remain however: the progression of the Euro against the Dollar, which may stall European growth, as well as increase the cost of Europe as a destination for customers of the dollar zone; and the international geopolitical situation, for which the improvement is an absolute necessity to the outright recovery of the European hotel industry.

Methodology

This report is based on a sample of 6,000 corporate-run chain hotels in Europe, representing 600,000 rooms. The data, gathered monthly and from each hotel, are redressed according to the categorical division of the corporate chain supply and by the weight of each country in the European Union. 

These results are from data that has been supplied by the chain hotels in France and Europe, for which MKG Consulting is the official statistics supplier. The complete dossier relating to hotel activity in France and Europe will be published in the February/March issue of HTR magazine.

MKG Consulting has the largest database outside the USA, with the best coverage of all the hotel segments, i.e. the data from 10,000 hotels / 1,000,000 rooms throughout the world.

Contact:

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

 
Also See: European Budget Hotel Industry Shows Growth in RevPAR; Not as Cheerful in the Other Hotel Segments / MKG Consulting / November 2003
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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