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Madrid Hotels Enjoy Increased Profit in 2016

According to the 2016 data published by Hot Stats, hotels in Madrid managed to increase their gross operating profit per available room (GOPPAR) by 3.8%. Thanks to fairly strong December and solid results of the first part of the year, hotels in the Spanish capital enjoyed a third consecutive year of profit increase.

In December, Madrid hotels had to face a significant drop of the average room rate of 6.8% to 126.68 euro. This made revenue per available room (RevPAR) decline as well (-0.9%). However, efficient cost saving helped Madrid hotels stay on top of the challenging situation and achieve growth of GOPPAR. This has become possible because of labor savings (-2.3%) and overheads (-4.5%). Despite posting good results, in 2016 hotels in Madrid couldn’t reach the results of the two previous years, when the growth of profit estimated +19.7% in 2014 and +27.4% in 2015.

Hotels in another European capital, Paris, suffered from significant decline of year-on-year profit. Devastating incidents made the hospitality sector of the City of Light suffer from a decline of 40.2%. This was mostly caused by post effects of terror attacks in November 2015. In January 2016, the decline of RevPAR estimated 15.0%, causing the decline of profit of 51.1%. This was not the only problem for hotels in Paris as in June they suffered from low demand because of flood (-40.3% profit reduction), followed by strikes of air-traffic controllers in May and September that made hotels profits fell by 37.1% and 19.2% respectively. Even such a major event as the UEFA Euro Championship couldn’t save hotels in the capital of France from inevitable declines. The year-end results are the following: the occupancy fell by 11.3%, the average room rate fell by 5.9% to 314.27 euro, and RevPAR lost 19.9% in 2016. As it was hard for hotels to cut costs by decreasing labor costs because of French employment law, Paris hotels posted profit conversion of just 19.2% - one of the worst results in whole Europe.

16.02.2017

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