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European Hotel Industry Continues Recovery; Results
for Corporate Hotel Chains by Country for the
12 Months through October 2004
Paris, December 8 2004
  • After two months of clear improvement, the good results of the European hotel industry continued at a more moderate pace. RevPAR rose by 0.6% in October.
  • The medium-term improvement continued. The occupancy rate and the average daily rate progressed favourably over 12 months, for a RevPAR rise of 3.4%.
  • Though Spain is trailing, hotel results from the United Kingdom demonstrate a return to activity, with a RevPAR on the rise by 8.1% over 12 months.
Monthly results for corporate hotel chains by category
in Europe* for October 2004
Occupancy Rate 10/04
Diff. in Occ. Rate (pts)
ADR

10/04

Change in ADR in %
RevPAR 10/04
Chg. in RevPAR in %
0*
72.3%
-1.2
29.6
6.5%
21.4
4.8%
1*
74.4%
-0.6
37.4
3.3%
27.9
2.4%
2*
74.3%
-0.5
65.9
3.3%
49.0
2.6%
3*
69.7%
-0.3
85.5
0.0%
59.6
-0.4%
4*
72.1%
0.4
131.0
-0.1%
94.5
0.5%
GLOBAL
71.7%
-0.1
96.2
0.7%
69.0
0.6%
Source: MKG Consulting Database - Official chain hotel statistics - November 2004 
Average Daily Rate and RevPAR expressed in euros incl. of tax
* European Union of 25 member-states in 2003 and 2004

Budget categories drive RevPAR growth

The month of October is traditionally good for business tourism, with numerous exhibitions and meetings, however October 2004 was not able to compensate for the drop recorded at the same time last year (-2.1%) versus 2002. At the European level, the number of customers remained even (-0.1 points). With a very slight rise in average daily rates of 0.7%, the overall RevPAR remains very close to the level registered last year at the same time.

During October, the euro held steady at a record high against the dollar, causing a lower budget of customers whose purchasing power is measured in the American currency. We therefore see that it is the midscale and upscale hotels that are having the most difficulty maintaining business levels.

Results by category show the good health of the budget and hard-budget categories, with average daily rates significantly higher despite a drop in occupancy rates. RevPAR are therefore still positively oriented in these categories.

On the upmarket segment, the maintaining of average daily rates at their former levels is accompanied by a slight rise in occupancy leading to a rise in RevPAR.

Only the midmarket category fell in October. The drop in average daily rates did not allow maintaining occupancy rates. This segment must therefore deal with the concessions granted in previous months by upscale hotels that therefore managed to attract customers that previously turned to 3* hotels. 

Results of corporate chain hotels by category in Europe* 
total over 12 months at the end of October 2004

Occupancy Rate 10/04
Diff. in Occ. Rate (pts)
ADR

10/04

Change in ADR in %
RevPAR 10/04
Chg. in RevPAR in %
0*
71.8%
-1.0
29.4
5.8%
21.1
4.4%
1*
71.3%
-0.2
37.6
3.4%
26.8
3.1%
2*
69.1%
0.3
64.2
3.0%
44.4
3.5%
3*
63.7%
1.1
82.5
-0.4%
52.6
1.3%
4*
65.4%
1.4
127.9
2.3%
83.6
4.5%
GLOBAL
65.9%
1.0
93.0
1.9%
61.3
3.4%
Source: MKG Consulting Database - Official chain hotel statistics - November 2004 
Average Daily Rate and RevPAR expressed in euros incl. of tax
* European Union of 25 member-states in 2003 and 2004

Over a 12-month period, results nevertheless remained clearly positive. RevPAR posted a rise of 3.4%, beginning with the +2.3% recorded at the same period last year. This encouraging result is tied to the improvement in average daily rates in the context of a return to growth in occupancy rates.

The majority of European countries posted rises in RevPAR in the medium term

This positive trend over 12 months is shared by nearly all European countries, confirming the return to good health of the sector in nearly all of Europe. Spain is nonetheless the only country to post a RevPAR that was down over a twelve-month period (-5.9%). The growth in supply has increased competitive pressure in the major urban centres, leading to hotel results even more sensitive to economic downturns, as has been the case in recent months.

Results of corporate chain hotels by country in Europe* 
total over 12 months at the end of October 2004

Occupancy Rate 10/04
Diff. in Occ. Rate (pts)
ADR

10/04

Change in ADR in %
RevPAR 10/04
Chg. in RevPAR in %
GERMANY
60.6%
2.3
80.9
-0.2%
49.0
3.7%
AUSTRIA
72.5%
3.9
77.7
0.8%
56.3
6.5%
BELGIUM
65.2%
1.3
85.6
-1.0%
55.8
1.0%
NETHERLAND
67.5%
1.3
97.1
-2.0%
65.5
0.0%
UNITED KINGDOM
74.0%
1.9
113.8
5.3%
84.2
8.1%
SPAIN
65.5%
-0.8
88.5
-4.7%
58.0
-5.9%
SWEDEN
58.0%
-2.0
100.2
6.2%
58.1
2.6%
DENMARK
60.9%
2.5
127.8
-2.3%
77.8
1.9%
FRANCE
66.6%
0.0
71.3
2.6%
47.5
2.6%
Source: MKG Consulting Database - Official chain hotel statistics - November 2004 
Average Daily Rate and RevPAR expressed in euros incl. of tax

Over 12 months, the hotel industry in the Netherlands hit even in the end of October. Rate drops eventually allowed a rise in occupancy rates that was great enough to lead to an increase in RevPAR. This seems to show the slow but steady improvement in the sector in this country, particularly exposed to changes in the number of international customers. The situation is rather similar in Belgium, where stimulation through rate drops led to an improvement in RevPAR.

Germany also saw a recovery led by occupancy rates that improved overall. The chain hotel industry of that country is characterised by a large dependence on business customers. The variability in occupancy rates is highly marked by drops during the weekend or holiday periods. At the same time as the return of business customers to German hotels, rate strategies are still looking towards diversification in customer types in order to improve occupancy levels - still among the lowest in Europe. In France, growth in RevPAR has been sustained by rises in the average daily rates. The United Kingdom, which previously saw drops in RevPAR, recovered rapidly, seeing growth in this indicator; Over a twelve-month period, the UKs RevPAR rose to 8.1%. The country this can boast the highest progression in Europe.

These results demonstrate that there has been an improvement in activity in Europe in 2004, and we can count on this trend to continue in 2005. Nonetheless, the upcoming changes in crude oil prices and the value of the dollar risk diminishing the rate of this recovery.

Methodology

The MKG Consulting Database for Europe contains a sample of 6,000 corporate chain hotels, representing 600,000 rooms in Europe. The data, gathered monthly and for each hotel, is redressed according to the category within the corporate chain hotel 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 an excellent representation of all the hotel segments.

Contact:

Georges Panayotis
+33 (0)1 56 56 87 90
georges.panayotis@mkg-consulting.com
http://www.mkgconseil.com
Also See: Results of the French Hotel Industry in October 2004 Boosted by 4 Star Paris Hotels / MKG Consulting / December 2004
In August 2004, RevPAR Drops 2.1% for the French Hotel Industry / MKG Consulting / September 2004
In July, the Average Occupancy Rate for the French Hotel Industry Drops / MKG Consulting / September 2004
Monthly RevPAR of the 25-Nation European Hotel Industry Rose by 5.2% in May 2004, Recovery Continues / MKG Consulting / July 2004
French Chain Hotel Performance On the Rise, May 2004 RevPAR Up +8.5% Over Previous Year / MKG Consulting / June 2004
Monthly Corporate Hotel Chain Results in France for June 2004; Rise in RevPAR Reached 3.9% / MKG Consulting / Aug 2004
2004 Rankings of the 10 Largest International Hotel Groups and the 20 Largest Brands; InterContinental Hotels Group Overtakes Cendant / MKG Consulting / March 2004
Monthly RevPAR of the 25-Nation European Hotel Industry Rose by 5.2% in May 2004, Recovery Continues / MKG Consulting / July 2004


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