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Hotels in Europe Suffer From Falling Profit Five Months in a Row

News It looks like hotels in mainland Europe experience certain problems this year. In April, they suffered from falling profit per room for the fifth month in a row. All major departments experience declines, so it is hard to identify one source of the problem. In April 2019, GOPPAR (gross operating profit per available room) fell by 8.4% year-on-year.

RevPAR fell by 1.2% to 114.51 euro. Non-room revenues fell as well. Food & Beverage featured a decline of 8.4%, and the whole Conference & Banqueting category had even a bigger decline – down 16.6%. TRevPAR was negative for the second month in a row in April (-3.4% to 168.47 euro). That being said, the payroll level fell by 0.5% to 56.90 euro. This is the first time since December 2016 that hotels in mainland Europe lowered their payrolls.

In general, April was a poor month for Europe’s hospitality industry. Only January 2019 and its 10% year-on-year decline in profit was worse than April. After 25 months of almost unstoppable growth, mainland Europe now returns to weaker performances and falling profit. Naturally, some destinations performed worse and some – better. Hotels in Stockholm were among outsiders in April. Their profit fell by 21.3% to 59.21 euro. This is an untypical situation for the Scandinavian capital. As a rule, more tourists visit Stockholm as days become longer. However, this trend doesn’t work in 2019, and so the profit per room in April was 5.7% lower than in March.

RevPAR of Stockholm hotels ended up losing 10.6% to 110.01 euro. Average room rate lost 13.0% to 140.44 euro. This made GOPPAR lose 21.3%, as it is mentioned above. Payroll was also negative in April 2019, -2.7% to 65.63 euro.

Naturally, some destinations performed better than others. For example, April was a fairly successful month for hotels in Bucharest. The Romanian capital had strong growth in key metrics, but rising payroll level almost nullified that growth. However, the current payroll of Bucharest hotels (23.6% of total revenue) is still relatively low. Occupancy dropped by 5.6% to 74.6% in total, but local hotels didn’t feel any difficulty because of that as the average daily rate added fantastic 17.2% to 118.18 euro. RevPAR ended up adding 8.9% to 88.14 euro. However, that was not enough to offset the effect of growing payroll. In April, payroll added 17.3% to 31.17 euro, lowering GOPPAR to only +3.6% (60.62 euro).


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