Many hoteliers have entered into price discounting in an effort to boost occupancy levels, however in many markets demand has still not materialized. Consequently, the European hotel industry witnessed a fall in revenue per available room (revPAR) of 10.4 percent in March to reach € 62 compared to the € 69 achieved in March 2002. 

Interestingly, preliminary figures from the HotelBenchmark Survey by Deloitte & Touche reveal that hotels in the Euro-zone were less impacted with revPAR declining only 5.8 percent to reach an average of € 64 for the month. Encouragingly, despite the tough trading conditions, six of the 38 markets tracked on the survey managed to report double-digit revPAR growth. These were Dublin (+15%), Frankfurt (+24.2%), Gothenburg (+20.4%) and Vienna (+13%). 

The improved revPAR performance in Frankfurt (24.2 percent) was mainly due to the biennial trade show (ISH-Internationale Fachmesse fuer Gebaeude - und Energietechnik und fuer Erlebniswelt Bad) held on the 25th � 29th March, which increased occupancy 16.6%. The Gothenburg market experienced the second highest growth in revPAR (20.4 percent) which can be largely attributed to the timing of the International Gothenburg Horse Show, which attracts 73,000 visitors, and which took place at the end of March this year as opposed to beginning of April last year. This helped hotels in Gothenburg improve occupancy levels 15.4% over the same period last year. The strong performance of the Dublin market is a reflection of the two rugby matches played in March (Ireland v England and Ireland v France), whilst hotels in Vienna benefited from a decrease in room supply after the 600-room Hilton closed for renovation in January 2003. 

Some of the largest revPAR declines were witnessed in Eilat, Istanbul, Jerusalem, Tel Aviv and more surprisingly Salzburg. Hotels in Salzburg saw revPAR plummet by 46.5 percent due to the yearly Osterfestspiele being held in March last year as opposed to April this year. The war in Iraq and the continuing tension in Middle East were the greatest contributing factors to the poor performance throughout Israel and Turkey.

Hotels in both Jerusalem and Tel Aviv reported occupancy levels of only 20 percent, whilst hotels in Eilat fared slight better recording occupancy levels of 33 percent. According to The Palm Beach Post, only 55,000 tourists visited Israel in February 2003 compared with 154,000 in February 2000, a decline of 64 percent. The paper also reported that 862,000 vacationers travelled to Israel in 2002, which is the lowest number since 1982, when Israel engaged in the war in Lebanon. 

During the 12 months to March 2003, revPAR across all Europe has shown an overall decline of 3.7 percent to € 71 compared the same period last year. Across the four regions (Northern Europe, Western Europe, Central/Eastern Europe and Southern Europe) revPAR declines were experienced, with hotels in Central/Eastern Europe recording the largest fall at 7.0 percent driven primarily by a decrease in average room rate. Hotels in southern Europe continued to be the strongest performing across the region witnessing a marginal decline in revPAR of 1.3 percent. Despite the general decline in the region the Athens, Barcelona, Madrid and Milan markets all witnessed an increase in revPAR compared to the same period last year. 

An end to the conflict in Iraq will definitely put the European hotel industry back on track for a slow but steady recovery, but until the world economic recession over, the short-term future for the industry remains bleak.