Tough trading conditions caused by global economic and political events are the primary cause for the decline. Since 2000 occupancy levels have fallen six percentage points as travel has been scaled back, particularly post the events of 9/11 and during the Iraq war in early 2003. To stimulate demand hoteliers have discounted prices resulting in average room rates now being Euro 8 cheaper than in 2000. With fewer people travelling and less money being spent it is hardly surprisingly that hotel revenue has fallen by an average of Euro 7,000 per available room during this time.

Encouragingly the cost cutting measures put in place during the last recession (in the late 1990�s) mean that the industry is leaner and so better able to respond to a changing operating environment. During this time costs � both direct operating expenses and undistributed operating expenses � have been controlled, falling by nearly Euro 2,000 per available room. The most notable savings have been made in administration and general and property operations maintenance. The latter is hardly surprising as a number of hotels have scaled back their capital expenditure plans after the events of 9/11.

Commenting on the results, Julia Felton, Executive Director of HotelBenchmark said:
"2004 results indicate that a gradual recovery is beginning in the industry. With revPAR growth expected this year we are confident that the industry will experience positive growth in profitability in 2004, helping reverse the 12 percent decline experienced in 2003."

The European Annual Profitability Survey 2004 is available to contributors on-line at www.HotelBenchmark.com. 

Note: All analysis in Euros.

The HotelBenchmark Survey by Deloitte contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels and 1.2 million rooms every month. 

HotelBenchmark Survey
Rob Gray
+44 (0) 20 7007 1099.