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NATO Summit drives huge profit growth for Brussels hotels

NATO Summit drives huge profit growth for Brussels hotels
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Hotels in Brussels recorded a 116.8 percent year-on-year increase in profit per room this month, as a result of the Belgian capital hosting the NATO Summit, according to the latest data.

The staggering year-on-year increase in performance was led by an 18.7 percentage point uplift in room occupancy, to 75.1 percent.

Whilst more measured, the 3.0 percent increase in achieved average room rate, to €144.28, helped fuel the 37.2 percent increase in RevPAR (Revenue per Available Room) for the month, to €108.37.

This strength of demand in Brussels enabled hoteliers to drive top and bottom line performance to some of the highest levels recorded since the terrorist activity in the Belgian capital in March 2016.

In addition to the increase in Rooms Revenue, hotels in Brussels successfully achieved an increase in Non-Rooms Revenues, including Food and Beverage (+23.2 percent) and Conference and Banqueting (+26.4 percent), which fuelled a TrevPAR (Total Revenue per Available Room) increase of 28.9 percent to €148.77.

Whilst the strong top line performance enabled hoteliers in Brussels to record a 7.3 percentage point reduction in payroll levels, at 42.7 percent of total revenue, this cost still remains high against the European average of 28.9 percent. As a result, and in spite of the staggering year-on-year increase, profit conversion at Brussels hotels remains relatively low at 26.6 percent of total revenue this month.

Hotels in Rome Coming Back Down to Earth After Holy Year High

Further to the standout performance of hotels in Rome in 2016 due to the Jubilee or Holy Year of Mercy, profit levels are realigning, illustrated by the 12.3 percent year-on-year decline in profit per room this month.

By this time last year, it was estimated that 9.1 million people had made the pilgrimage to Rome to celebrate the Jubilee and the swathes of visitors enabled hotels in the Italian capital to leverage average room rate and enjoy an uplift in Non-Rooms Revenues.

However, RevPAR performance this month has fallen by 11.5 percent as a result of a 3.4 percentage point decline in room occupancy as well as a 7.9 percent drop in achieved average room rate, to €224.56.

In addition to the drop in RevPAR, declining revenue in Non-Rooms Departments contributed to a 6.5 percent drop in TrevPAR to €287.36.

Whilst hotels in Rome have been able to successfully modify costs to account for the falling revenues, illustrated by the savings this month in Payroll (-0.7 percent) and Overheads (-5.3 percent), the adjustment was not sufficient to offset the decline in revenue, and as a result profit per room fell to €107.63.

Exceptional Occupancy Enables Warsaw Hoteliers to Leverage Rate to Drive Profit

Hotels in Warsaw recorded a 17.1 per cent increase in achieved average room rate this month which fuelled a 23.4 percent increase in profit per room, as hoteliers were able to leverage rate on the back of room occupancy levels of +80 percent.

The strength of demand enabled hotels in Warsaw to achieve considerable rate growth across all market segments, including Best Available Rate (+14.5 percent), Residential Conference (+26.1 percent), Corporate (+8.4 percent), Individual Leisure (+30.9 percent) and Group Leisure (+17.3 percent).

Furthermore, increases were recorded in Non-Rooms Departments, including Food and Beverage (+8.8 percent) and Conference and Banqueting (+17.7 percent). As a result, TrevPAR at hotels in Warsaw increased by 12.7 percent year-on-year, to €141.35.

Payroll at hotels in Warsaw remains amongst the lowest in Europe, at just 21.5 percent of total revenue, following a 1.6 percentage point reduction this month. The meagre payroll levels contributed to a profit conversion at a staggering 49.6 percent of total revenue this month.

Read the full article: http://www.eturbonews.com/158551/nato-summit-drives-huge-profit-growth-brussels-hotels

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