Major cities still hit by hotel profit slump - TRI

Mixed month for European properties

Major European cities are still being hit by a fall in profit per available room, according to TRI Hospitality Consulting.

Its latest HotStats survey, released today (November 2), show it fell year on year by double digits in all but one city, London where the drop was 8.2%.

TRI said five cities suffered "massive" declines:  Amsterdam (-24.4%), Budapest (-33.9%), Munich (-36.4%), Prague (-38.6) and Vienna (-41.3%).

But while all ten cities surveyed saw their profits drop, some, like Paris and London enjoyed a rise in occupancy.

Paris saw a 6.6% rise in occupancy levels to 79.8% for September compared to the same month in 2008.

But average room rates in the French capital have fallen by 17.1% this year to €160.50, TRI said.

In London, the consultants said enjoyed a 3.9% after a 3.9% fall in rates. It led to a 0.5% rise in revPAR (revenue per available room).

Jonathan Langston, TRI's managing director, said: "Following a summer of fluctuating price and volume, it was back to business for London hoteliers in September.

"Twelve months on from the collapse of Lehman Brothers and the immediate impact of the banking crisis, London hoteliers are growing profits."

TRI said that while some cities were showing "glimmers of improvement", the market in Prague was "going from bad to worse".

The Czech Republic's GDP has declined by 5% and 1,500 new rooms had opened in the capital in the last 18 months.

Occupancy levels fell to 68.3%, the lowest among the ten cities surveyed while average room rate fell 31.1% and revPAR  slumped by more than 40%.

It room rate of €73.83 left it "alongside Budapest and Warsaw at the bottom of the pile".

"Prague is not the only city to have considerably gone off the boil, but it has clearly been the victim of significant levels of new hotel development at a time when hoteliers can ill afford any additional threats to performance" said Mr Langston.

www.trihc.com