The Dutch hotel industry has not yet recovered from the recession. The gross operating profits are still 25% below the level of 2000…
The Dutch hotel industry has not yet recovered from the recession. The gross operating profits are still 25% below the level of 2000. This is shown in the HOSTA 2005 report, published by Horwath Consulting. The hotels lowered the prices yet again, but regained only part of the hotel guests. The average room occupancy increased, from 65% to 67%. The average room rate however decreased again, from € 102 to € 98. For 2005 and 2006, a slow growth is expected.
The research by Horwath Consulting shows that the hotels are still suffering from the difficult economic situation. Because of a further decrease in price, the hotels were able to attract more hotel guests, but the occupancy is still very low. The occupancy increased from 65.3% to 66.7%. In 2000, the occupancy was 76.4%; almost 10 percentage points higher. The average room rate decreased again by 4% to € 98. Last year, the average room rate had already decreased from € 114 to € 102.
The hotels were able to increase revenues from restaurant, meeting rooms and other facilities. Because of this, the total revenue per room increased, from € 42,600 to € 43,000 per room. Because of lower costs, the gross operating profit increased by 8.6%, from € 14,700 per room to € 16,000 per room. However, the gross operating profit is still 25% below the level of 2000.
Slow recovery
The first signs of a recovery became visible in the second half of 2004. For 2005 and 2006, the expectations are that the recovery will continue slowly. The room rates however will remain under pressure, says director Ewout Hoogendoorn of Horwath Consulting. Especially business guests are looking for ways to cut expenses. Companies that in the past guaranteed large numbers of rooms per year at a fixed price, are now asking hotels to compete against other hotels at the lowest price. Business guests also use the internet to find the lowest prices.
The hotels themselves are budgeting a price increase to € 105 in 2005 and € 109 in 2006. At the same time, the occupancies are expected to increase to 69% in 2005 and 72% in 2006. Even so, the results will still be below the level of 2000.
New markets
To achieve this recovery, hotels are focusing in part on new markets such as Eastern Europe and Asia. Especially China is expected to become very important, because the Netherlands became an approved destination for tourist groups from China last year. Hotels that are aiming for this maret, indicate they expect the number of Chinese guests to quadruple. Especially in the region of Amsterdam, it is expected that at 5% of total guests, China can become a more important country of origin than for example Germany, France of Scandinavia.
The HOSTA 2005 report is a publication by Horwath Consulting. Over 200 three, four and five star hotels in the Netherlands participated in the research.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
