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Hotels in Europe Finally See Their Profits Grow

News In May, hotels in mainland Europe finally saw their year-on-year profits increase for the first time since the start of 2019. The growth could be seen across all major departments, and this fact makes the achievement even more important. May’s GOPPAR (gross operating profit per available room) surged to 78.16 euro, reaching the growth of 5.9%. This is the best result since October 2018.

The growth in profit became possible because of positive dynamics in RevPAR (+3.7% year-on-year to 133.46 euro) and the achieved average room rate (+2.3% year-on-year to 174.22 euro). After months of flat or negative results, room occupancy finally increased. This happened for the first time since the third quarter of 2018. Non-room revenues were also on the rise in May 2019. Food & Beverage posted an increase of 4.5%. Thanks to these positive results of the main metrics, hotels in mainland Europe enjoyed growth in TRevPAR (total revenue per available room) of 3.3% to 195.61 euro. This result is 24.2% higher than the year-to-day figure. Payroll is the only source of challenge for hotels in the region – this metric added 0.9% to 59.42 euro in May.

Even though May is finally a good month for the hospitality industry of the region, hotels in mainland Europe still have much work to do to boost their results and recoup the weak start of 2019 in order to reach the third consecutive year of growing profit. As usual, some destinations performed better than others. For example, hotels in Madrid enjoyed a strong month thanks to the 2019 Champions League Final between Tottenham Hotspur and Liverpool. Approximately 150,000 English football fans visited Madrid, boosting average room rate by 12.9% to 188.62 euro and helping RevPAR to add 15.9% year-on-year.

Ancillary revenues had a modest growth of 3.0% to 65.35 euro. The year-on-year increase in TRevPAR was 11.8% (222.9 euro). These metrics contributed to a wonderful growth in GOPPAR – an increase of 22.4% to 101.18 euro. Madrid hotels also enjoyed a profit conversion of 45.4% in May 2019.

Hotels in Kyiv, in their turn, had an incredibly weak month. Even though local hotels were able to increase their room occupancy by 7.8% to 58.0% in total, this became possible at the expense of a decline in the achieved room rate of 54.5%. Consequently, RevPAR fell by 47.5% to 56.33 euro, and GOPPAR lost 56.4% year-on-year to 39.31 euro.


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