Jumeirah Port Soller Hotel & Spa, Mallorca
August was another outstanding month of profit growth for hotels in Europe, following year-on-year increases recorded in June (up 23.4 percent) and July (up 16.9 percent).
August represented a third consecutive month of significant profit growth for hotels in Europe as GOPPAR levels soared by 11.8 percent due in part to increases across all revenue departments as well as cost savings, according to the latest data tracking full-service hotels from HotStats.
August was another outstanding month of profit growth for hotels in Europe, following year-on-year increases recorded in June (up 23.4 percent) and July (up 16.9 percent).
As a result, GOPPAR has now increased by 11.7 percent in the eight months to August 2018, paving the way for a bumper year of profit growth for hotels in Europe and continuing a significant incline since 2016 when profit growth was down 1.6 percent, followed by an 8.9-percent jump in 2017.
The growth this month was led by an 8.3-percent increase in RevPAR as hotels in Europe recorded a 1.7-percentage-point increase in room occupancy to 78.0 percent, coupled with a 5.8-percent increase in achieved average room rate, which hit €169.86.
In addition to the increase in rooms revenue, year-on-year growth was also recorded in non-rooms departments, including food & beverage (up 5.7 percent) and conference & banqueting (up 12.1 percent) on a per available room basis, which contributed to the 7.3-percent lift in TRevPAR in August to €184.48.
In addition to the positive movement in revenue, cost savings, which included a 0.7-percentage-point decrease in payroll to 30.9 percent of total revenue, as well as a 0.3-percentage-point drop in overheads, contributed to the punchy year-on-year growth in profit.
As a result of the movement in revenue and costs, profit conversion at hotels in Europe was recorded at 38.3 percent of total revenue in August, which is above the margin for year-to-date 2018 at 35.9 percent, illustrating the positive performance recorded at hotels in the region this month.
Profit & Loss Key Performance Indicators – Europe (in EUR)
August 2018 v August 2017
- RevPAR: +8.3% to 132.56 euros
- TrevPAR: +7.3% to 184.48 euros
- Payroll: -0.7 pts to 30.9%
- GOPPAR: +11.8% to 70.65 euros
“Whilst it was a very positive month of performance for hotels in Europe this month, our data suggests that the overall growth was primarily driven by locations in the north and east of the region. This was, in part, due to the south west being hit by sweltering temperatures, which deterred visitors to the typically-bustling capital cities,” said Michael Grove, Director of Hotel Intelligence and Customer Solutions, EMEA, at HotStats.
Barcelona Blues
Warm temperatures contributed to hotels in Barcelona recording a 26.4-percent year-on-year decline in profit per room this month, but this may also be due to the wider reported decline in the number of visitors to Spain in 2018, the result of which will have been particularly noticeable during the leisure-led month of August.
It was a top-down decline in performance for hotels in the Catalan capital this month, as RevPAR fell by 19.5 percent as a result of a 4.4-percentage-point drop in room occupancy to 82.4 percent, as well as a 15.1-percent decline in achieved average room rate, which fell to 241.62 euros.
Significant declines were also recorded in non-rooms revenues in August, which included a 12.5-percent drop in food & beverage revenue and a 33.7-percent year-on-year decline in conference & banqueting revenue.
Furthermore, the contribution from non-rooms revenue at hotels in Barcelona this month was well below year-to-date averages, at just 28.9 percent of total revenue against 35.9 percent for the eight months to August 2018.
This was further illustrated by the significantly lower contribution from food & beverage revenue on a per-available-room basis at 67.00 euros this month, more than 20 euros below the year-to-date average at 87.99 euros.
As a result of the lower contribution from non-rooms revenues, as well as plummeting rooms revenue, TRevPAR at hotels in Barcelona fell by 16.7 percent year-on-year to 279.67 euros.
Hotels in Barcelona were further hit by rising costs in August, which were led by a 4.8-percentage-point increase in payroll to 24.8 percent of total revenue.
Despite the challenges this month, profit conversion remained strong at 46.9 percent of total revenue.
Profit & Loss Key Performance Indicators – Barcelona (in EUR)
August 2018 v August 2017
- RevPAR: 19.5% to 199.00 euros
- TrevPAR: -16.7% to 279.67 euros
- Payroll: +4.8 pts to 24.8%
- GOPPAR: -26.4% to 131.14 euros
Profit per room for year-to-date 2018 at hotels in Barcelona is now 11.8 percent behind the same period in 2017, which is following robust growth in both 2016 (up 9.6 percent) and 2017 (up 8.4 percent).
“2018 has not been an easy year for hotels in Barcelona with profit levels falling in six of the last eight months. Whilst the defence of falling visitor numbers across Spain has been attributed to a shift towards a strategy of developing ‘international tourism of quality,’ the drop in Barcelona could also be due to a backlash following last year’s anti-tourism protests, as well as the political unrest following the illegal independence vote in October, which is when hotel performance levels began to fall away,” said Grove.
When in Rome
Despite escaping the extreme heat, hotels in Rome also struggled in the leisure-led month of August, notwithstanding the city being one of the world’s most popular tourism destinations.
The key issue for hotels in Rome is the decline in year-on-year room occupancy, which fell by 0.5-percentage-points this month to 65.4 percent from a high of 74.9 percent back in August 2015.
The drop impacted the ability of hotels in the Italian capital to drive non-rooms revenue, which this month fell to just 26.7 percent of total revenue compared to 33.3 percent for the year-to-date 2018.
Despite the 2.6-percent increase in RevPAR to 171.90 euros, the decline in non-rooms revenue resulted in hotels in Rome recording a 2.4-percent drop in TRevPAR to 234.69 euros.
Furthermore, rising costs, which included a 1.1-percentage-point increase in payroll to 42.3 percent of total revenue, meant profit conversion at hotels in Rome fell to just 22.1 percent of total revenue.
The challenges faced by Rome hoteliers in recent years is punctuated by the drop in profit per room, which has fallen by almost 20 euros over the last three years to 51.83 euros in August 2018 from 71.27 euros in August 2015.
Profit & Loss Key Performance Indicators – Rome (in EUR)
August 2018 v August 2017
- RevPAR: +2.6% to 171.90 euros
- TrevPAR: -2.4% to 234.69 euros
- Payroll: -1.1 pts to 42.3%
- GOPPAR: -11.2% to 51.83 euros
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
