It is with optimism that the hotel activity results were gathered by MKG Consulting for the month of May…
It is with optimism that the hotel activity results were gathered by MKG Consulting for the month of May. These statistics have confirmed, before the arrival of the summer season, the turnaround in the trend that we have been seeing over the last two months. The average occupancy level rose to 69.5%, i.e. 1.7 points more than last year. The average room rates recorded a rise of 2.7% to 94.3 euros. These developments have led to a rise in RevPAR of 5.2% over the previous year.
These positive results followed an already encouraging March and April (+7.6% and +6.5% respectively), though for which the rises may also be attributed to the weakness of the indicator levels reached in 2003, in the midst of the Iraq war, and while the consequences of the SARS epidemic in Asia were still lingering. However one must go back to November 2002 to find 3 consecutive months of a rise in RevPAR.
Results by category show the very good performance of all segments. The budget 2* hotel industry recorded the most satisfactory results, and posted a solid gain in RevPAR, with rises in both occupancy levels (+2.8 points to 73.5%) and the average room rates (+4.3% to 64.7 euros incl. VAT).
As in previous months, the hard-budget categories (0* and 1*) insured a rise in RevPAR by maintaining sustained growth in the average room rates. We note however, that in May, there was a high increase in occupancy rates: +0.6 points to 74.9% in 0* and +2.0 points in 1*. The strong growth in the chain supply in recent months is therefore perfectly assimilated.
The midmarket and upmarket segments did not return to the rises in occupancy rates observed in April, where the “catching-up” affect over the years is much more pronounced. We nevertheless note that they remained resolutely oriented upwards (+1.3 points in 3* and +1.6 points in 4*). In that which concerns the average room rates, the growth of 3.2% observed in the upmarket properties is all the more significant since it followed an already positive change in May of last year.
Over 12 months combined, the RevPAR has remained virtually unchanged. The revenue per available room rose to 58.5 euros, which is only down by 0.4%. The occupancy rates nearly reached previous levels (-0.4 points) and the average room rates were stable (+0.3%). The hard budget hotel industry continued to maintain good results with rises in RevPAR greater than 3.5%. Results from 2*, 3*, and 4* hotels were slightly in retreat, though we are far from the falls sometimes seen in previous months.
These efforts have unfortunately not yet been fruitful. The Netherlands still posts a monthly drop in RevPAR (-1.8%) though with regards to the indicators seen in recent months (RevPAR aggregated over 12 months combined was down by 9.5%), this drop ultimately appears limited. The assessment is less encouraging for Spain, which posted a RevPAR that was down by 11.2% in May. The occupancy rates and average room rates were clearly down (-3.2 points and -7% respectively). Over 12 months, RevPAR has been in retreat by 4.8%.
Though the global results for the month of may have resulted from more sustained growth in the Union, they must also be attributed to efforts made by hoteliers to optimise their income within an environment that is still uncertain. The systematic adaptation of rates thanks to yield management techniques, and the development of new distribution channels such as the internet have allowed limiting the drops in occupancy in the majority of the countries. Policies aiming at conquering new customers have been fruitful. Russian customers, and those of the emerging Asian markets (and Chinese customers in particular), are highly sought after and are increasingly present in Europe.
Methodology – The European database of MKG Consulting contains a sample of 6,000 corporate chain hotels representing 600,000 rooms in Europe. The data, gathered monthly from each hotel, is redressed by categorical division of the corporate chain hotel supply and by weight in the European Union. MKG Consulting has the largest hotel database in the world outside the USA, with a good representation of all the hotel segments.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
