Corporates paying more in Europe’s hotels

by Business Travel iQ | 08 March 2018

Room rates and non-room revenues are up again

Corporate rates in Europe’s full service hotels continue to rise and the profits that hotels make from food and beverage and conference and banqueting continues to rise too, according to latest hotel statistics from HotStats.

Our chart this week shows how average room rates have increase in the year to January 2018 in different sectors.

COTW 0803

Source: HotStats

The company reports that revenue per available room (RevPAR) increased to €82.70 due to a 1.4 percentage point increase in occupancy to 58.2%. The average room rate recorded for the month was €142.21.

Non-rooms revenue has also increased in the past year. Revenue from food and beverage is up 3.4% while that from conference and banqueting has increased by 4.6%.

Europe’s hotels have also been successful at keeping costs in check. Payroll costs are down by 0.9 percentage points on average, helping gross operating profit to rise by 16.0% year on year to €29.42 – effectively giving European full-service hotels a margin of 22.4%.

The HotStats report includes a focus on Moscow, which has recorded a 16.7% increase in profit per room. Room occupancy in the Russian capital increased by 6.4 percentage points to 62.4%.

Although achieved average room rate dropped by 3.4% to €90.09, total revenue per available room increased by 6.2%.

“Although Russia is well on the road to recovery following the recession which began in 2014 as a result of the rouble collapsing, the drop in crude oil prices and economic sanctions, demand remains resistant to price increases and top and bottom line growth at hotels in Moscow is being almost entirely driven by an increase in volume,” said Pablo Alonso, CEO of HotStats

The strong results for Europe’s hotels continues a nine-month-long stretch of increased total revenues for hotels, putting pressure on corporate budgets. Companies with significant travel to Russia will be particularly concerned, especially with the 2018 World Cup in the country just around the corner.

The increases in non-rooms revenue suggest that this could be an area of negotiation for corporates.

Upcoming Events

Keep up to date with our Weekly Insight email every Thursday

Register Here