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Hotels Across Europe Enjoy Higher Profits in July 2018

In July 2018, hotels in Europe primarily improved their metrics, reaching the year-on-year increase in profit per room of 16.9%. This became possible mostly because of a growing room rate that added 11.3% for the month. World Cup in Russia and strong demand from leisure tourists during the peak season were among the main reasons for a good month.

Gross operating profit per available room (GOPPAR) remained high in July, though it was not as record one as in June 2018. The metric reached EUR62.47 in July, marking the second consecutive month of great results for the hospitality industry of the region. Such a growth in profit was mostly the result of the surging RevPAR that added 11.3% to EUR143.86. Room occupancy stood still at the level of 78.5% while the achieved room rate reached EUR183.20. That made July 2018 the 20th consecutive month of the growing average room rate.

Thanks to this consistent growth of the achieved average room rate, it became possible to drive the rate from EUR152.46 in November 2016. The total increase over the 20 months estimated 6.9%. As we can see, profit was raising mostly thanks to room revenue growth. The results of non-room departments were mixed. While food and beverage added 1.9%, the year-on-year declines of conference & banqueting and leisure segments reached 2.4% and 8.0% respectively.

Profit per available room reached EUR83.70, showing the profit conversion of 41.8%. Growing demand was mostly fuelled by leisure tourists and Best Available Rate travelers. Their total share estimated 57.2% of all room nights. Not only the World Cup in Russia was responsible for this growth. Warm weather in July allowed many leisure destinations to enjoy a peak season. For example, hotels in Lisbon recorded an increase in profit per room to EUR54.69 in July 2018, which is 19.5% higher than the result of July 2017.

The year-on-year increase in RevPAR reached 15.1% for hotels in Lisbon. The revenue was growing despite a 2.3% decrease in occupancy to 77.7%. That happened because of an 18.5% increase in the average room rate to EUR34.97. Thanks to that, TrevPAR was still growing and added 12.1% despite falling non-room revenues, namely, conference & banqueting (-15.6%) and food & beverage (-14.2%). Profit conversion reached 39.4% for Lisbon hotels. The year-to-date increase in profit per room reached EUR48.26.

08.09.2018

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