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March 2013, the European hoteliere begins to wobble

In March 2013, a spring thaw is still to be desired in almost all countries of the European Union, and the changes in the hotel industry on the continent have not climbed above the zero mark.

After maintaining performances over the course of February, the relapse was so much stronger that European hoteliers have declined by 2.7% of their revenue per available room over the period. The fall of 0.4 points in occupancy rates was indeed exacerbated by the 2% decline in average prices. The spring depression concerns all hotel segments except the one-star category which is maintaining its activity, with an improvement of 0.7% of RevPAR driven by the 2.2% increase in average prices which makes up for the 1 point decrease of its occupancy rate.

Naturally enough, the spring is benefitting Southern Europe, as Spain and Italy continue positive recovery in the hotel cycle which began in February, after reaching the depths during the year 2012.

In March, the observed trend over the last few months has been inversed and those in last place have found themselves in the lead. Spain and Italy are pulling the results up of the entire continent thanks to a religious event calendar that is highly celebrated in the two destinations. This year, Holy Week took place in March, and not in April as was the case in 2012, leading to an improvement of 2.2% and 2.3% respectively in RevPAR. Portugal, meanwhile remained on a downward trend, weighed down by its upscale segment. On another note, Hungary dethroned Austria in the rank of best increase in Europe with a revenue per available room increased by 12.9%, thanks to the success of the Budapest Spring Festival, which took place between the 22nd of March and the 7th of April. But the level of average prices attained is still far from satisfactory. The gloom is appropriate for all other European countries that saw their RevPAR drop, mostly due to their low average prices. Denmark, Sweden, and Poland recorded the largest declines, of respectively 12.7%, 12.8%, and 11.6% of revenue per available room.

Throughout the first quarter of 2013, RevPAR has been able to withstand with the advance during the first two months. But occupancy rates indicate a weakness in the market, which does not yet translate completely on tariff policies. The persistence of the downturn will have a multiplier effect that is difficult to control in terms of average price. A better trade show schedule in the second quarter must be followed to get back on track.

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