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2016 is looking good for European chain hotels

2016 is looking good for European chain hotels

Profit Per Room at Dublin Hotels is Fastest Growing in Europe

Whilst year-on-year growth has slowed slightly this month profit performance at hotels in Dublin remains the fastest growing in Europe, achieving a 25.5% increase for year-to-date 2016, according to the latest data from HotStats.

The year-to-date growth in the city builds on profit increases in both 2014 (+9.2%) and 2015 (+33.5%) and means profit per room at Dublin hotels has achieved a 77.4% increase in the 36 months to October 2016, to €83.95.

The limited number of additions to hotel stock in recent years as well as the broad appeal of the city has enabled hotels in Dublin to maintain strong room occupancy levels, which, in turn, has allowed for room rate to be consistently leveraged, exemplified by the 12.3% increase in achieved average room rate this month, which has included rate growth in the corporate (+5.8%) and leisure (+9.4%) segments.

As a result of the movement in top line performance, hotels in the Irish capital have achieved a 16.8% year-to-date increase in achieved average room rate, which has driven a 17.2% increase in RevPAR (Revenue per Available Room), to €142.34. The consistent growth in revenue, as well as cost savings has enabled profit conversion to increase to 36.8% of total revenue for year-to-date 2016.

Cost Savings Drive Profit Growth at Hamburg Hotels

Hotels in Hamburg achieved a 26.4% increase in profit per room this month on the back of an 8.0% increase in total revenue as astute management effectively slashed costs.

In addition to a 10.1% increase in RevPAR, which was driven by year-on-year growth in both room occupancy (+6.2 percentage points) and achieved average room rate (+2.1%), hotels in Hamburg achieved an increase in ancillary costs, including Food & Beverage Revenue (+3.4%), Conference & Banqueting (+3.6%) and Leisure (+23.7%) on a per available room basis.

But it was in cost savings where real gains were made, which included a reduction in Rooms Expenses (-4.3%) and Food & Beverage Expenses (-16.3%), as well as Undistributed Operating Expenses, such as Admin & General (-18.1%) and Property & Maintenance (-29.8%).

Despite a 1.6% increase in payroll on a per available room basis, the overall 8.6% saving in overheads helped drive the 26.4% increase in profit per room this month, to €73.76.

Growth Continues at Moscow Hotels Despite Economic Uncertainty

Further to the heavy decline in profit performance at the onset of the economic downturn in Russia in 2015, hotels in Moscow have now achieved a 13.2% year-on-year increase in GOPPAR (Gross Operating Profit per Available Room) in the 12 months to October 2016 to €35.22.

The remarkable recovery is in spite of some uncertainty as to whether the Russian economy remains in recession, but has been fuelled by tactical revenue management.

Whilst rate has been sacrificed in the leisure segment in order to drive volume, resulting in a 10.6% decrease in this measure for year-to-date 2016, this has been offset by rate growth in both the corporate (+5.5%) and residential conference (+2.4%) segments.

This has resulted in a 12.0% increase in RevPAR in the ten months to October 2016, which has been supported by increases in ancillary revenues, including Food & Beverage (+4.7%) and Conference & Banqueting (+7.1%), to achieve a total revenue of €86.93 per available room.

Despite also relying heavily on third party intermediaries to drive volume, illustrated by the 18.7% year-on-year increase in Rooms Costs of Sales for year-to-date 2016, profit per room so far this year has increased by 17.2% to €36.18.

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