After the brutal drop in revenues of European properties, a new cycle is underway. MKG Hospitality’s annual study of rack rates in 2010, which will be published this month, has just confirmed the return to activity. Europe’s hotel industry has come back up for air and, consequently, has a wider maneuvering margin in terms of rates. Although certain countries are still under pressure… this complete study offers analyses of rate positioning by hotel chain, price differential according to category and country, relationship between average daily rates and rack rates, the change in these prices over time, an analysis in function of peak and off-peak seasons, monthly changes in prices by major European destination… Here is a sampling.
The moroseness that reigned last year, evidenced by sharp drops in rack rates for the 3* and 4* segments, progressively faded over the year 2010. As the return of Business clientele confirmed itself, European hoteliers progressively proved to be more entrepreneurial. The comparative analysis of two periods of strong activity – June and October 2010 – shows that once the increase in demand is confirmed, hoteliers were able to begin the forward march of their pricing engines. The keys to negotiations are now out of the hands of buyers, which had the controls in recent years. And while promotions are still sought after, especially by leisure clientele, growth in rack rates (*) makes these discounts less penalizing for the average daily rates of properties.Logically harder hit by the shrinking demand from business clientele, upscale properties show stronger growth in prices between the pre- and post-summer season. Sweden wins the award with 26.7% growth. In Stockholm, the rack rate for the 4* segment went from 189 to 234 euros. As major economic centers and international hubs, capitals were the first to benefit from the attenuated effects of the economic crisis. In Paris, London, Athens, Brussels as well as Warsaw and Budapest, the upmarket hotel segment perked up again with increasing occupancy rates, allowing for double-digit growth of rack rates. The best established destinations in European such as Geneva, Paris and London saw their upscale segment erase a two year slump with a return to pre-crisis rack rates. But not all European countries share this situation. For many of them, pressure remains high, limiting ambitions to raise prices. And for some, prudence remains the byword, especially in Italy, the Czech Republic and Slovakia, three countries that still have not achieved a positive bottom line. Several reasons explain why hoteliers were unable to...
This content is for subscribers only. You have 80% left to discover.
Every week, the HON team brings you an expert look at the world of hospitality.
By becoming a member, you will have access to a complete ecosystem: exclusive content, jobs, etc.
BECOME A MEMBERAlready a member ? Login
