The « European Destinations Observatory », January to August 2012

Mixed-results for European hotels between January and July 2012, but August in Olympic shape

In August 2012, hotel performances in the European Union stood out from the moroseness that is affecting many economic sectors. 5.7% growth in the Revenue per Available Room, RevPAR, is a veritable leap over the small variations seen since the beginning of the year. Yet we can observe that this progress is not the result of increased occupancy in Europe’s hotels, but rather due to the net increase in average daily rates, thanks to exceptional circumstances in a small group of countries. The overall trend is a decrease in occupancy rate, although it remains high for August, and a fairly contrasted change in average daily rates depending on geographic area, that remains globally positive. The Olympic Games in London and the German exhibition and fair market successfully brought indicators into the green, while the majority of European countries struggle with the crisis. If there is nothing wrong in capitalising on one-off benefits, the sector’s outlook remains morose due to a worsening economic situation that is standing in the way of national business travel and decreasing the volume of intra-European travel.

Since the beginning of the year, several German cities have registered great performances thanks to their well-developed business activity. In the north of the country, Berlin registered a RevPAR growth of 6.9%, due to a positive increase in occupancy rate. Dusseldorf with its well-known exhibition and fair activity succeeded in obtaining a RevPAR growth of 6.2%. In the south, the dynamic city is Munich. In August 2012, the hotel industry felt the benefit of the Congress of the European Society of Cardiology. For 4 days, more than 30,000 participants came to the capital of Bavaria to take part in this event.

In Hungary, the capital, Budapest, registered a RevPAR growth of 10.8% thanks to a strong increase in average rate (+9.6%). In Northern Europe, performances differ depending on the country. In Copenhagen and Helsinki, RevPAR shows positive variation including a significant increase of 8.3% in the capital of Finland. Performances in Sweden and Norway follow a reverse trend: Oslo hoteliers had to lower their prices by more than 12% to keep the occupancy rate stable; in Stockholm, the occupancy rate decreased by almost 3 points.

In Spain, apart from great performances recorded by Barcelona (where RevPAR increased by 6.4%), most cities have been affected by the economic downturn. The occupancy rate in Madrid is down by nearly 3 points, while in Seville the drop is 4 points and in Zaragoza 5.6 points. The Italian hotel industry also encountered great difficulties coping with the fall in customer numbers, with all markets showing a negative variation in occupancy rate, especially Florence with a 4.6 point decrease.

The United Kingdom took advantage of the uplift of the Olympics, which put London at the forefront of media attention. Indeed, the average rate reached £137.0, up 36.3%, and RevPAR rose 35.8% to £117.7 in London in the month of August. However, the Olympics did not result in a higher occupancy rate, due to simultaneous cancellations by Summer regulars.

Source: MKG Hospitality: www.mkg-group.com

European Cities Marketing
Flavie BAUDOT – flavie@europeancitiesmarketing.com

MKG Hospitality
Orianne KIENY – o.kieny@mkg-hospitality.com