Profit challenges for Hamburg hotels continue into 2016. Profit per room at hotels in Hamburg declined by 3.7% in January as the city continues to face challenges to top line performance and costs, according to the latest data from HotStats.
Following an excellent year in 2014, during which hotels achieved an 8.7% profit increase led by a 6.5% increase in RevPAR (Revenue per Available Room), Hamburg hotels started to see a slow down in performance in H2 2015, as the development boom in the city softened volume, leading to a 3.4 percentage point drop in room occupancy and a 6.9% year-on-year drop in profit per room.
Challenges in volume have continued into January 2016, with hotels also suffering a 7.5% year-on-year drop in Food and Beverage revenue and a 22.2% decline in Conference and Banqueting Revenue, off-setting the 4.4% RevPAR increase.
In addition to the 0.2% decline in TrevPAR (Total Revenue per Available Room) for the month, the poor start to 2016 was further compounded by operating cost increases, including a 4.1% increase in payroll per available room, contributing to the 3.7% decline in profit per room, to €26.46 from €27.49.
Madrid Hotels Continue to Build on Strong Foundations Laid in 2015
Hotels in Madrid recorded a 7.7% increase in GOPPAR (Gross Operating Profit per Available Room) for the month of January 2016, further to the significant profit growth achieved in 2015. Due to Madrid’s profile as the capital of Spain and its role as a key European financial centre, hotel performance has closely followed the changing fortunes in the nation’s economy in recent years.
In 2015, Spain’s economy grew by 3.2%, the highest GDP growth rate since 2007, and the positive economic performance contributed to a 28.2% year-on-year increase in GOPPAR for Madrid hotels, to €48.04 from €37.48, equivalent to a profit conversion of 32.4 per cent of total revenue.
GDP growth of 2.7% is projected in Spain for 2016, alongside an improving overall economic picture and hotels in the capital have started the year strongly, recording a 6.1% increase in RevPAR for the month, driven by a 12.5% increase in achieved average room rate, to €138.57. Despite increasing payroll (+2.6%) and overheads (+0.1%), the strong top line performance fuelled a 7.7% GOPPAR increase in January.
Green Shoots for Hotels in Moscow as Profit Growth is Recorded in January
Hotels in Moscow started the year brightly, recording a 9.6% year-on-year increase in GOPPAR in January, despite industry experts suggesting 2016 will mark a second consecutive year of Russian recession.
Russia’s economic woes began in late 2014 as a result of falling oil prices and economic sanctions, and as GDP contracted by 3.7% in 2015, GOPPAR in the capital’s hotels dropped by 2.8%, to €30.82 from €31.72 in 2014.
The negative impact of the recession on the performance of Moscow hotels in 2015 was, in part, offset by an increasing dependence on third party hotel bookers, or OTAs, to maintain room occupancy levels. However, as a result of this over-reliance, year-on-year Rooms Cost of Sales at Moscow hotels increased by 30.2% in 2015, contributing to a 2.5% decline in profit in the rooms department.
This trend has continued into 2016, as, despite recording a 1.8% increase in RevPAR, Rooms Departmental profit declined by 1.2% in January. The decline was as a result of significant year-on-year increases in Rooms Cost of Sales (+11.8%), Rooms Expenses (+17.0%) and Payroll (+6.7%) on a per available room basis. Meanwhile, ancillary revenue growth, including a 12.7% increase in Food and Beverage revenue, contributed to the 5.4% year-on-year increase in TrevPAR, to €56.95 for the month.