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European Hotels Enjoy Higher Profits in March

News The beginning of spring was really good for hotels across Europe as they managed to reach the growth of profit per room of 0.7% if compared to the same period of the previous year. The growth is even more precious taking into consideration declines in such sectors as non-room revenues or conference & banqueting. According to the information published by HotStats, the declines in Conference & Banqueting and Food & Beverage sectors estimated -7.1% and -2.0% respectively.

At the same time, the growth of room revenues (+2.7%) made it possible to offset the negative effect of the declines mentioned above. The revenue per available room (RevPAR) was growing mostly thanks to the increased room rate (+3.2% to 150.12 euro). The occupancy estimated 68.5% for the given period. A number of sectors also posted growth. These are Corporate (+4.8%), Group Leisure (+11.8%), and Residential Conference (+3.8%). At the same time, the Commercial sector demand was falling (-3.2% to 39.4% of total room nights sold).

Based on all the changes in revenue departments, total revenue per available room (TrevPAR) managed to keep its growing trend, but the increase is not as avid as in the previous two months – only 1.1% to 159.40 euro in total compared to March 2017. The total growth of TRevPAR in Q1 2018 estimated 3.1% for hotels in Europe. That said, hotels in Europe managed to reach 11 consecutive months of profit growth, but the result of March was lower than the previous months as the profit added only 0.7% to 50.04 euro. This result is the equivalent of profit conversion of 31.4%.

Major European cities performed differently in March 2018. For example, it was definitely not the best month for hotels in Rome. The year-on-year decline in RevPAR was 9.8% to 129.43 euro, causing TrevPAR fall by 12.1% to 203.92 euro. GOPPAR lost tremendous 37.5% to 27.80 euro. This significant decline happened despite the year-on-year growth in average room rate by 2.8% to 210.52 euro. The fall of room occupancy by 8.6% to 61.5% in total is the major reason for such an unsuccessful month. Rome hotels in all segments suffered from the lack of guests. March is not the first challenging month for the Italian capital. The results of Q1 2018, in general, don’t look very promising as the occupancy lost 5.8% to 54.5% in total.

Prague hotels, in their turn, had almost a flat month despite the increase in RevPAR of 3.9%. The growth of this metric was fuelled by a 2.6% increase in room occupancy and the growing average room rate of 92.66 euro (+0.3%). However, declines in non-room revenues made the month’s profit nearly flat – GOPPAR lost -0.5% to 42.18 euro.


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