July 2012 in Europe: the hotel cycle remains on hold

It is as if the hotel cycle were in suspense at the top of a roller coaster just before it makes it over and plunges thanks to hoteliers having learned not to give in to panic over rates. Of course occupancy rates were forced down, but overall they are high at more than 72%, and the erosion is not yet catastrophic. This July and overall for countries in the European Union, rate management has made it possible to grow margins in 1* and 2* economy categories just where the prices remain very accessible. The 0* category is poorly represented in Europe and the increase in the 4* and 5* category is now more difficult to justify. Nonetheless, Revenue Management has made considerable progress when it comes to revenue management. The major Western European countries, which are driving the economic activity and thus hotel performances (Germany, France, United Kingdom, Belgium), have still succeeded in growing their RevPAR by a few % points thanks to improved daily rates. The most “spectacular” performances in terms of percentage in Central European countries were stacked on top of this solid base: Austria, Hungary, Poland, Czech Republic..., but these were applied to more modest starting figures. Nonetheless these adjustments were beneficial after the years 2010 and 2011 which were more difficult. The situation in Southern Europe remains quite contrasted, with Italy continuing its slump, Spain raising itself up a bit thanks to its success as a summer tourist destination, and Portugal which relies on the good results of its upscale hotels. Improvement in Spain’s activity suggests a guarantee of stability for the summer, while hotels in Greece are taking advantage of the low prices it is allowed. More atypical, Sweden and the Netherlands cases, where the indicators dropped into the red, are related above all to...