Monday, July 22, 2019

Strong European Performance Set To Continue

2018 proved a successful year for Europe hoteliers as a whole, with year-end data from STR showing a 1.2% increase in occupancy to 72.4% across the continent, feeding a 3.9% increase in ADR to €112.49 and a healthy 5.2% increase in revenue per available room to €81.43.

Stand-out performances were seen by Dublin and Brussels. The Irish capital registered a 6.5% increase in ADR to €145.15and a 7.2% jump in RevPAR to €121.70 – the eighth consecutive year of RevPAR growth.

In Brussels, hotels saw a 5.2% increase in ADR to €115.50 while RevPAR saw a 12.4% increase to €84.17 as the country continued to bounce back from the negative impact of the terror attacks of 2016.

Will we see such strong performances in 2019? This is the year that will see the UK leave the European bloc, and while demand remains high, increased supply is presenting challenges for current operators.

We caught up with Thomas Emanuel, director of business development at STR, to get his thoughts on the current state of play in the European hotel market in terms of revenue and profitability.

Q: What are the current challenges facing the hotel industry in Europe in terms of profitability?

Emanuel: It is impossible to look at Europe as a whole because each country and market is so different. To use a handful of examples: London, and the UK in general will have to look at labour costs, particularly post-Brexit with changes to freedom of movement. The weakening of the Pound Sterling has also had an impact on the cost of imports. Paris struggles with labour costs, which in 2017 were 42% of total sales, the highest of the major markets we track across Europe. Other cities, such as Istanbul and Brussels, have seen profitability increase because of recovery from terror, whilst cities such as Munich are more susceptible to fluctuations based on events taking place in the city.

Q: How did 2018 performances really compare?

Emanuel: RevPAR across Europe grew 5.2% (Euro constant currency) in 2018, and this was mainly driven by ADR, which was up 3.9%, as opposed to occupancy which grew 1.2%. In addition, with the exception of Spain (-0.4%) and Switzerland (-0.1%), ADR increased in local currency in all major European countries in 2018.

Q: What are the key metrics hotels should focus on in terms of revenue and profitability?

Emanuel: Hoteliers need to be focused on both the top line — occupancy, ADR, RevPAR and TrevPAR — as well as the bottom line — GOPPAR and EBITDA. Having an understanding of all of these metrics is vital in order to understand your performance as well as your position in the market.

Q: How can hotels lean on data to make better revenue decisions?

Emanuel: Data guides hoteliers to fully understanding their performance and trends. It is also pivotal for hoteliers to be able to understand how they benchmark against the market and their competitive set. STR reports can enable them to do so.

Q: What is more profitable: following your Comp Set or striking out on your own path?

Emanuel: It is pivotal to do both. 

Q: And finally, what is your outlook for hoteliers in Europe in 2019/2020?

Emanuel: In Europe, we have just seen another year of RevPAR growth of greater than 5%. We are bullish about 2019 and expect to see more RevPAR increases, again, predominately driven by ADR. Occupancy is likely to be challenged in a number of markets as we see supply growth start to increase.


This post originally appeared on the Duetto website and is reproduced with their permission.

Duetto
Duettohttps://www.duettocloud.com/
Duetto is hospitality’s only Revenue Strategy Platform. A powerful suite of cloud applications addresses the industry’s complexity in distribution and technology, providing solutions that increase organizational efficiency, revenue and profitability.

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