The improvement in the trend that has been felt and announced in recent months has been confirmed by the delivery of MKG Consulting of hotel results of the first semester of 2004 in Europe. During the course of the month of June this year the occupancy levels appear to be better than those observed last year, up by 2.5 points to obtain an average of 72.2% on average. In all categories combined, the average daily rate rose by 1.9% between 2003 and 2004. Finally, the revenue per available room saw a rise of 5.6% to 68.6 Europe from one year to the next, to approach an evolution of 5.2% already recorded in May.

This concerned all the categories. This is notably the case of the 2* category that recorded, like in May, the most satisfactory result. By playing both on the levels of occupancy (2.9 points to 77.4%) and the increases in the average daily rates (+3.7% to 64.9 Euros including tax), the 2* properties saw in June a rise in RevPAR of 7.7%. The midmarket and upmarket segments, particularly stressed in 2003, recorded an encouraging month of June, with a rise in RevPAR sustained by significant increases in occupancy (+3.4 points in 3*, and +2.3 points in 4*). The hard budget categories (0* and 1*) insure, as in previous months, the increase in RevPAR by maintaining a sustained growth in the average room rates.

With these positive variations, the European hotel industry thus saw the fourth consecutive month of a rise in monthly RevPAR. The improvement in the economic condition in the majority of major countries of the European hotel industry, the return of American and Asian customers, still timid due the high rate of the Euro though nevertheless large in number, and the emergence of new source markets for European hoteliers (Chinese, Russian customers, etc.) explain the return to growth in RevPAR.

These monthly results follow a rather satisfactory beginning of 2004. During the course of the first semester of this year, the total RevPAR of the European hotel industry rose by 4.8% to reach 59.3 euros over 6 moths combined. The occupancy rates were on the rise by 1.6 points to reach 64.5%. The average daily rates were positively oriented (+2.2%). While the previous period was characterised by a systematic drop in the average daily rates following efforts undertaken to limit the drop in occupancy (internet sales, research for substitution customers), this positive change seems to confirm the return of more profitable customers in terms of average daily rates. This is mostly the case in France and the United Kingdom, major countries for corporate hotel chains in Europe, which lifted the results upwards. The other countries continue to play on the rise in occupancy to improve RevPAR, sometimes at the expense of the levels of the average daily rates.

These globally satisfactory results mask situations that are still mixed among the various countries. The United Kingdom and Austria have seen the most significant rises in their RevPAR. In the case of the United Kingdom, a catching-up effect versus the a delicate beginning to the year 2003 has contributed to creating an even more spectacular turnaround, both in terms of the level of occupancy and in the average daily rate. Over the first six months of the year, Germany has seen an improvement in its situation. The efforts undertaken in terms of average daily rates have allowed hotels to improve their occupancy, which nevertheless remains still particularity low in this country. Improvement in the occupancy rates is also significant in Italy, where, thanks to stable average daily rates, the RevPAR has seen one of the highest increases.

The most preoccupying market in this beginning of the year 2004 remains Spain, where the average daily rates were in a clear downfall with a drop in occupancy rates of 1.7 points versus the first semester of 2003. Faced with a slowdown in demand, and notably due to the wait-and-see attitude of businesses during the election period and the consequences of the terrorist attacks in Madrid, the Iberian hotel industry had difficulties leading the development of its supply-particularly rapid in recent years.

France is in the middle of European results. The first semester ended in a growth in RevPAR by 3.9%. However, the summer season does not appear to be very favourable for the country's hotel industry. Suffering from a quality/price ration that is judged unfavourable versus other competitive destinations (Croatia, Tunisia, or the Central European countries), and suffering from the consequences of the 2003 heat-wave, French destinations-particularly in the North-posted in July a drop in the number of visitors versus last year.

Overall, the statistics show mixed sentiments. Though European hoteliers may be satisfied by a situation where the RevPAR levels are once again on the rise, the recovery still remains somewhat moderate compared to the poor results of the first semester of 2003 where the handicaps accumulated within the tourism and hotel industry.

Methodology

The MKG Consulting European database includes a sample of 6,000 corporate chain hotels representing 600,000 rooms in Europe. The data, gathered monthly from each hotel, is redressed by categorical distribution of the corporate chain hotel supply and by weight of each country in the European Union. 

MKG Consulting has the largest hotel database in the world outside the USA, with a good representation of all the hotel segments.