Of the 30 markets reviewed in the survey, only five saw a decline in rooms yield, when measured in euros. Hotels in Barcelona reported the highest growth in rooms yield at 27%, followed by hotels in Madrid and Berlin, with a rooms yield growth of 18%. This was attributable in part, to Spain�s aggressive tourism promotions, a shift in demand for accommodation from the Eastern Mediterranean as a result of the crisis in Kosovo, and a significant improvement in occupancy as the hotel market began to benefit from Berlin�s status as the German seat of government. Hotels in Geneva and Jerusalem ranked third in yield growth at 16%.

The most expensive destination in Europe is still Paris, which recorded an average room rate of E172 (US$182) in 1999. London hotels were a close second at E170 (US$180), followed by Warsaw E157 (US$166). Despite poor trading conditions, Moscow achieved an average room rate of E153 (US$161). Nearly two-thirds of the cities reported an average rate exceeding E100 (US$106). However, no German cities breached the E100 barrier, reflecting the overall pressure that remains on room rates relative to other European countries.

Only four cities�Birmingham, Prague, Dublin and Moscow�reported a decline in average room rates, when measured in euros. Except for Moscow, which experienced a 15% erosion in average room rates, the decline for Birmingham, Prague and Dublin was limited to less than 2%. This larger than average drop in Moscow room rates is primarily a result of economic instability and the US$-euro relationship.  

As compared to 1998, 19 cities in the survey reported an increase in demand. However, for two-thirds of these markets, the increase was limited to less than 2%. Jerusalem witnessed the greatest improvement, with occupancy increasing by 13% to reach 63%.

Occupancy in Berlin and Dublin also improved, growing by 7%. Amsterdam recorded the highest occupancy level at 84%, narrowly edging out Zurich at 83%. The London and Dublin hotel markets achieved occupancy levels greater than 80%, a function of the maturity of these markets and supply constraints. The lowest occupancy levels were recorded by hotels in Moscow, where occupancy levels of 45% were experienced.

Comments Nick van Marken, Partner, Hospitality Consulting, EMEIA, Arthur Andersen, �Although the outlook for European hotel performance in 2000 is optimistic overall, we are likely to see regional differences. Industry opinion remains divided on the effect that the millennium year will have on hotel demand. Certain areas, such as London with the Millennium Dome, and Hannover with the Expo 2000 exhibition, should benefit from the increase in visitor attractions and millennium events.�

Cities covered in the European survey include Amsterdam, Athens, Barcelona, Berlin, Birmingham, Brussels, Budapest, Cardiff, Dublin, Edinburgh, Frankfurt, Geneva, Glasgow, Hamburg, Istanbul, Jerusalem, London, Madrid, Manchester, Milan, Moscow, Munchen, Paris, Prague, Riga, Rome, Tel Aviv, Vienna, Warsaw and Zurich.  The definitive source of hotel performance data outside North America, the Arthur Andersen Hotel Industry Benchmark Survey, launched in 1996, comprises information gathered from more than 3,500 hotels in 200 markets in 140 countries.