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Hotels in Europe Enjoy Fantastic Performance in December 2019

The end of the year turned out to be ultimately positive for hotels across Europe. With such stellar results in December 2019, hoteliers hope to stay in the green zone in 2020. The year ended with strong results as the last four months featured the year-on-year profit growth. In December 2019, the year-on-year increase in the gross operating profit per available room (GOPPAR) reached 9.8%. This was the best result of the year.

All key metrics showed growth in the last month of 2019. The occupancy across the region added 2.3%, and the average daily rate (ADR) added 3.2%. This helped the revenue per available room (RevPAR) to skyrocket and add 7.1% to 93.66 euro, reaching the highest increase in 2019. That being said, the expenses of hotels in Europe were also growing. Room labor costs added 5.9%, and total payroll grew by 2.1% when compared to December 2018. Finally, overheads added 3.1% year-on-year.

After three quarters of mixed performance, the fourth quarter of 2019 helped European hotels to recover. However, if looking at the full financial year 2019, GOPPAR is still 0.8% lower than in 2018. As usual, some destinations performed better than others, and Budapest is definitely one of them. In the last month of the year, hotels in Budapest experienced fantastic growth in all key metrics. This helped the capital of Hungary reach a truly marvelous increase in GOPPAR of 35.6%. December was the fourth month of double-digit profit growth for the city.

Occupancy of Budapest hotels added 3.6% compared to the same period a year ago, and this happened together with a surge in ADR of 12.2%. Naturally, RevPAR was also positive and added 17.6% year-on-year. This is one of the best results achieved by hotels in Budapest in 2019. Despite growing expenses, GOPPAR reached a fantastic growth of +35.6% to 61.63 euro. Profit conversion for Budapest hotels was at 40.4%.

Unfortunately, hotels in Nice couldn’t post similar results in December 2019. They ended the month with an unbelievable decline in GOPPAR of 65.4%. After seven consecutive months of growing results, Nice hotels entered a red zone and posted five consecutive months of losses. The decline in profit happened despite growing revenues. RevPAR added 13.0% year-on-year in December thanks to an increase in occupancy of 5.2%. However, ancillary revenues were falling, and together with significant growth in expenses, the increased revenues couldn’t offset an upsurge in costs.

29.01.2020

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