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MKG Exclusive: Hotel activity in Denmark in February 2012

Despite its Presidency of the European Union, the Scandinavian country is having a hard time filling its supply, according to data from MKG Hospitality.

There’s been a trend taking place in Denmark since August of last year that sees its hoteliers having a difficult time meeting last year’s OR rates. They have been consistently been negative since last summer and February 2012 is unfortunately no exception. Of course they are not that far away from the European average OR growth rate (-1.2%), but Demark hit the -4.4 mark whilst neighbouring Sweden has so far in 2012 been able to meet its OR from last year. There was in fact no major conference that took place in the Danish capital February 2012, whilst the pharmaceutical industry and the IT industry each had an event in Copenhagen in February last year. However, Denmark is currently at the seat of the Presidency of the European Union (as of January 2012) which brings much official and related international traffic to the northern European country, and therefore gives a more favourable prognosis to Denmark in the months leading up to June 2012. Despite previously meeting the criteria to join the European Economic and Monetary Union (EMU), so far Denmark has decided not to join, though the Danish krone remains pegged to the euro in much the same way that its Average Daily Rates (ADR) also remain close to Euro-zone countries. Danish ADR actually went up by two per cent to reach 126.5€ almost perfectly in line the European average growth rate for the month of February 2012 (+2.2%). There was indeed an event that took place in October that concerns the Danish hospitality industry as a whole, particularly those that have a restaurant on their premises. As of last autumn, the government has put a “fat tax” in place that would tax the amount of saturated fat served in restaurants, extending beyond fast foods, and entering the backyard of the hospitality industry, which has caused the HORESTA (The Danish Hotel and restaurant association) to react. The association states that, “The fat tax will thus result in increased costs for the hotel, restaurant and tourism industry in the range of DKK 250 to 350 million (33.6 to 47.1 M€) annually, which will be felt directly on the bottom line. This corresponds to 0.7 to 1.0 per cent of the total turnover of the industry.In a statement from last December, HORESTA states, “Food costs vary from company to company, but typically amount to between 25 and 40 per cent of turnover. As the food costs constitute such a large share of their turnover, the hotel and restaurant industry’s earnings are very dependent on the general fluctuations in food prices.” Despite this increase in ADR, it was not enough to counterbalance the OR which resulted in a negative result in the industry’s benchmark index. RevPAR for the month of February was consequently at a -6.2% growth rate (reaching 64.20 €), brought down notably by Denmark’s low OR

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