Performance varied significantly across the various segments of the market. Those hotels with an average room rate of under €50 experienced the smallest decline in profitability � 1.3 percent. The budget bracket was also the only one to report an increase in revPAR (revenue per available room) for the year, up 1.6 percent over 2001 levels, due mainly to a marginal increase in average room rate. In contrast, hotels with an average room rate of over €100 reported an average profitability decline of 15.4 percent fuelled in part by a seven percent fall in occupancy combined with a two percent decline in average room rate. 

Julia Felton, a director in travel, tourism and leisure at Deloitte & Touche commented: "As economic conditions deteriorate further, the budget sector has been aided particularly by business travellers for whom cheaper hotels have become a real option with the need to reduce costs. Being generally located along roadsides rather than city centres, these hotels have also benefited from increased road and rail travel following the shift in consumer travel patterns, post September 11 2001. Conversely, larger hotels and those located in primary cities have suffered the greatest declines in demand which has resulted in falls in room revenue and therefore profitability."

A key measure of efficiency is the ability of hotels to convert revenue in profit. On average, all German hotels converted 30 percent of total revenue to profit, compared to 32 percent in 2001. By contrast, the European average in 2001 was 38 percent. Hotels with an average room rate of under €50 were the least efficient at converting revenue to profit, with a profit conversion ratio of 21 percent, whilst hotels in Frankfurt and Munich were the most efficient with profitability conversion ratios of approximately 39 percent. 

Julia Felton said, "Hotels with higher average room rates and therefore higher rooms revenue should be able to convert more revenue to profit because the rooms department is the most profitable for the hotel. One of the reasons why German hotels have a lower profit conversion ratio than hotels in the rest of Europe is that German average room rates are some of lowest in Europe. In 2002 our sample of German hotels reported an average room rate of €84 compared to €109 for the rest of Europe. Low average room rates combined with low occupancy levels (average occupancy in Germany during 2002 was 60 percent) meant that rooms revenue in Germany for 2002 was €18,269 per available room compared to €25,915 per available room for Europe. Given the current outlook for the global economy and the German economy in particular, we would anticipate a continued erosion in profitability levels during 2003, and we do not anticipate any significant uplift in profitability until occupancy and average room rates move back towards to 2000 levels."

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels and 1.1 million rooms every month. Four regional monthly rate and occupancy reports are produced covering Asia Pacific, Caribbean and Latin America, Europe and the Middle East & Africa. These are supplemented by country reports for Australia, Belgium & The Netherlands, Germany, Italy, New Zealand, South Africa, the UK and a city survey for London. Annual profitability surveys are run across all regions of the world, whilst in Germany and London monthly profitability surveys are conducted. Our German survey collates data on the performance of some 700 hotels representing 125,000 rooms on a monthly basis making it the most comprehensive and authoritative independently operated survey available.

For further information on how to purchase data or details on how to join the survey please visit us www.HotelBenchmark.com or contact Lorna Clarke on +44 207 438 2870.