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Europe : best monthly results in 5 years

What a wonderful month of April! One had to wait nearly 5 years for Europe to once again see a rise of nearly 10% in RevPAR.The excellent monthly results for April constitute the best performance for the European hotel industry since…September 2000.

The 9.8% rise in RevPAR registered in April over the previous year simply constituted the best performance for the European hotel industry in nearly 5 years. Good economic results were seen in April in the majority of countries in the European Union, as Dorthe Thing, Manager of the Sheraton Stockholm, explains, “Both Swedish and international companies registered better results, thus leading to a rise in business travel”. The calendar has been favourable to the European hotel industry: Easter fell in March this year, business tourism profited from a longer period of activity, to the benefit of hotels positioned on this segment. Everything came together to make a reinvigorating cocktail: a combined rise in average daily rates (+4.5%) and occupancy rates (+3.3 points).HTR: How do you explain the success of Etap Hotel in Germany? _ A. W.: The brand was launched nearly simultaneously in both France and Germany; it is true that it has been successful here. It is a new product, both at the brand level and at the building level, as they are nearly all newly constructed units. All this was an immediate success. There is still room for Etap expansion, mainly in city centres. At the end of 2004 and beginning of 2005, new openings occurred in Berlin, Hamburg, St-Pauli, and Stuttgart. A new opening is also planned for Munich in 2006.With the exception of the budget hotel sector, which largely compensated for a drop in its number of visitors (consequence of its expansion in countries more mature in this type of product) by ri- sing average daily rates, all indicators are in the black in all categories. These very good results are driven by the midmarket and upmarket segments. The 3* and 4* categories registered rises equal to or greater than 10%, while 2* hotels rose by 7.8%.The majority of European countries follow this upward trend. Only two of them saw a negative RevPAR in April: Italy (-0.6%) which is heavily impacted by the poor results in the domestic economy, and the Czech Republic (- 7.5%), which finally registered a logical drop when compared to the excellent occupancy rates registered last year (78.3%). On the other hand, Germany experienced a month of April that will be for the record books (+22.7% in RevPAR). In the opinion of André Witschi, General Director of Accor Germany, “It is the best month of spring ever experienced by Accor in the German territory”. Numerous conventions and a high level of activity on the seminar segment allowed some cities to reach great results such as Cologne and Dusseldorf. Belgium, which began the festivities related to its 175th anniversary, also experienced a clear return to good health (+18.6%). Activity in the United Kingdom is far from weakening (+13.0%). Paradoxically, the 4.6% in growth in the French hotel industry, excellent results strictly speaking, pale in comparison to its neighbours.However, the highest results will in the end have been registered in Northern Europe, in Sweden (+41.2% in RevPAR) and in Denmark (+55.1% in RevPAR). “The month of April was clearly better than that of last year, with a rise in average daily rates and occupancy rates of around 10%”, confirms Susanna Meier, General Manager of the Hamler Tulip Inn in Helsinborg. “We have definitely observed growth in the number of our business customers, mainly Danes. This phenomenon is due to an economy that is in better health and we have been feeling it since the beginning of the year. We have also registered a slight rise in the number of leisure customers, composed of Swedes coming to spend a pleasant weekend in Denmark”.Dorthe Thing, the General Manager of the Stockholm Sheraton goes even farther than her colleague, “We are slowly returning to the performance levels of 2000. The month of May was excellent, and June should be fantastic. The conference and incentives segment is functioning better. However, the individual leisure traveller is also back. We have worked together with our colleagues and the tourism board to once again make Stockholm an appreciated destination”. This rebirth in attractiveness is observed in the facts. Stockholm benefits from direct flights from new airline companies. Low-cost airlines such as Ryanair, in addition to traditional companies such as Alitalia. Continental Airlines, will being direct flights to New York next month. In November, Malaysia Airlines began a Kuala Lumpur – Stockholm – New York flight.This fantastic month of April has allowed Europe to post a RevPAR that grew by 3.6% over 12 months. Spain and Italy are the only countries in the red. We wager that Northern & central Europe shall not be far from the steps of the podium at the end of the year.André Witschi, COO Accor for Germany HTR Magazine: April’s results were excellent in Germany. What are the primary factors of this strong increase in the RevPAR? _ André Witschi: April was a historic month. In fact, it was the best spring month Accor ever saw in Germany. It followed a horrible month of March and preceded a month of May that was far from its same excellence… Business activity was the primary cause of this April growth spurt thanks to the near absence of holidays, which were all concentrated in March and May this year. To this may be added a steady increase in international clientele. The advance announcement of the World Football Cup had a positive impact on leisure clientele. In some cities, such as Cologne, there was also the beneficial effect of the great fairs that worked well. January and February were fairly satisfactory. For the year 2005 one might suggest that it will resemble a roller coaster. From a geographic point of view, things are not so homogeneous. Some cities to the East are progressing well, in particular Dresden, while in Berlin the supply continues to grow faster than demand: although the volumes are increasing, this market continues to be one of the most difficult.HTR: In this context, how does Accor's participation in Dorint affects the business from an operating point of view? _ A. W.: The Dorint-Accor co-branding came to a head at the end of 2004 with the total rebranding of all the Sofitel- Dorint, Novotel-Dorint and Mercure- Dorint hotels. We have since moved on to the second phase of portfolio reorganization in Germany, which implies that the Accor hotels will in turn change brands. Thus sixteen new Novotels will be rebranded into Mercure. This is already the case for the pilot property in Hanover, which functions very well and posts excellent results. As we would hope, it is not a disguised Novotel, but truly a Mercure.HTR: How do you explain the success of Etap Hotel in Germany? _ A. W.: The brand was launched nearly simultaneously in both France and Germany; it is true that it has been successful here. It is a new product, both at the brand level and at the building level, as they are nearly all newly constructed units. All this was an immediate success. There is still room for Etap expansion, mainly in city centres. At the end of 2004 and beginning of 2005, new openings occurred in Berlin, Hamburg, St-Pauli, and Stuttgart. A new opening is also planned for Munich in 2006.

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