Today at the 2004 European Hotel Managers Association`s (EHMA) 31st General Meeting in Athens, the HotelBenchmark Team at Deloitte announced year-end 2003 results, which reinforced the view that the year 2003 has certainly been a very challenging period for the European hotel industry.

As a result of continued global challenges, revenue per available room (revPAR) levels across Europe fell by 7.5% during 2003 to €67, compared to the €72 achieved in 2002. This is some 18.0 % behind the exceptional year of 2000! This fall in revPAR performance was mainly driven by a 6.6% decline in average room rate as a result of price discounting.

The war in Iraq and the outbreak of SARS compounded already challenging operating and economic conditions, which continued to dampen corporate spending. In addition, weak domestic demand coupled with an appreciating euro has resulted in weak growth across the euro-zone during 2003.

Of the 37 markets tracked in the European edition of the HotelBenchmark Survey by Deloitte only four markets witnessed revPAR growth during 2003 and as many as 15 markets recorded a double-digit fall in revPAR. The best performing markets in 2003 were Dublin (+2.7%), Helsinki (+3.5%), Jerusalem (+10.5%) and Vienna (+12.1%).

Whilst many Northern and Western European cities witnessed double-digit revPAR declines in 2003, the regions as a whole only experienced a revPAR decline of 9.2% and 7.0% respectively. Markets most affected were Amsterdam, Copenhagen, Geneva, London, Paris, Stockholm and Zurich. The three major gateway cities in Europe, Amsterdam, London and Paris, have especially been affected by the large decline in American and Asian visitors following the war in Iraq, the weakness of the US Dollar and the outbreak of SARS. The London results are distorted by the appreciation of the Euro against Sterling with a currency adjusted revPAR decline of only 3.9%.

Hoteliers in Central Eastern Europe experienced mixed results during 2003, with the region reporting a revPAR decline of 7.5 %, compared with the same period last year. The strongest performing market in the region was Moscow, where revPAR grew by 13.9% when restated to US Dollars. The two markets in Eastern Europe that suffered most severely were Budapest and Warsaw, recording revPAR declines of 14.0% and 18.2% respectively.

Continuing the trend from 2002, Southern Europe was the best performer of the four European regions, witnessing a small revPAR decline of 4.2 % compared to last year. Barcelona, Madrid, Milan and Rome all saw single digit revPAR declines during the year, comparing favourably with many of their Western European city counterparts which recorded double-digit declines. The only exception has been Athens, which saw a revPAR decrease of 11.2 % during 2003. This decline was driven by average occupancy levels falling by 11.6%, which was largely attributable to the re-opening of the Hilton Athens and the Sheraton Grand Bretagne hotels in early 2003.

Marvin Rust>, partner of HotelBenchmark at Deloitte said: Whilst the rate of occupancy decline has slowed towards the end of 2003 the comparables for 2002 were weak. The results are therefore worrying as visitors are still checking out of the European market. However, given that airline passenger numbers appear to be starting to pick up and that Europe will be hosting key events such as the Olympics in Athens and Euro 2004 in Portugal, we are cautiously optimistic about hotel performance in Europe in 2004. The strength of the Euro to the US Dollar does however remain a concern.

Europe - Percentage change in revPAR reported in Euros (January - December 2003)

Over10% decline	5-10% decline	0-5% decline	0-5% growth	Over 10%growth
Amsterdam	Berlin	Barcelona	Dublin	Jerusalem
Athens	Madrid	Brussels	Helsinki	Vienna
Budapest	Moscow	Frankfurt
Copenhagen	Munich	Gothenburg
Geneva	Prague	Hamburg
Istanbul	Rome	Lisbon
London		Milan
Paris
Stockholm
Warsaw
Zurich

Source: HotelBenchmark Survey by Deloitte