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Hotels in Munich and London Post Declines in February 2018
One of the most popular travel destinations in Germany, Munich, didn’t have a powerful start of the year. February results indicate declines in all most popular metrics. The preliminary data provided by STR Global reveals that growing supply made it even more complicated for Munich hotels to run the business. Supply added 4.4% in February, making the demand fall by 3.0%.Occupancy was also falling, reaching the decline of 7.0% to 66.7% in total. The average daily rate (ADR) lost 9.5% to 113.06 euro. Finally, the decline in revenue per available room (RevPAR) estimated 15.8% to 75.46 euro.
February is the fifth consecutive month of declines for Munich hotels. With new hotels open virtually every month and the pipeline growing, the market becomes more competitive and more challenging for hotels. Occupancy and ADR are expected to keep falling in the coming months. There may be one more reason for the weak performance of Munich hotels in February 2018. This year, ISPO Munich was held in January instead of its traditional time in February.
Munich is not the only city with challenging results of the hospitality industry. Other international gateway cities also experience problems. London hotels didn’t manage to change the downward trend of recent months and posted declines again in February 2018.
The year-on-year results of London hotels in February 2018 are the following. The demand was growing and added 1.8%, but that was not enough to overcome the growing supply that grew by 2.2% last month. Naturally, this caused occupancy fall by 0.4% to 77.3% in total in February 2018 compared to February 2017. The average daily rate was growing – the increase estimated 1.2% to GBP133.84. RevPAR was positive and added 0.8% to GBP103.48.
These results look rather positive, but, on the other hand, they continue the trend of last months – the demand grows, but it cannot overcome growing supply, causing a dip in occupancy. Hotels in London have experienced this falling occupancy for the ninth month in a row. That said, ADR keeps increasing, and February 2018 became the 16th consecutive month of the metric’s growth. Even though the so-called “Brexit boost” starting to disappear, London hotels still enjoy slightly growing demand that, however, will not last forever. Once it is gone, London hotels will have to struggle with constantly growing supply that might make revenues go down.
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