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The recovery for Europe’s hotel industry is confirmed in May

Thanks to growth in occupancy rates and average daily rates, the monthly RevPAR for hoteliers in the now 25-country Europe is up by 5.2% in May. This new good result confirms the recovery of business after nearly three years of clear decline. While the continent as a whole breathes a sigh of relief, hoteliers in the Netherlands and Spain are still far from being able to rejoice.

“We saw better results than last year for May and June. One could even say that the market has truly picked up in the last two months.” Giuseppe Vincelli, Director Business Development of Rome’s InterContinental resumes the current trend and hoteliers’ renewed optimism perfectly. The average occupancy rate is 69.5%, or 1.7 points higher than last year. Average daily rates post growth by 2.7%. These evolutions lead to growth in the RevPAR by 5.2% from one year to the next. These good results follow the months of March and April that were encouraging even if their progress could be attributed to the mediocre results in 2003, in the midst of the war on Iraq, when the consequences of the SARS epidemic in Asia had not yet been made up for. These May’s results confirm the turnaround in the trend of the previous two months before the beginning of the summer season.May’s good results, therefore, are not completely the result of renewed economic growth. They certainly also betray much effort made by hoteliers to conquer new clientele and to optimise their revenues in a still uncertain environment . Unfortunately, these efforts are not fruitful everywhere. The Netherlands still posts a slump in its monthly RevPAR (-1.8%), but in light of the indicators read in recent months (the cumulated RevPAR on 12 months is down 9.5%), this drop is relatively limited. The outcome is less encouraging for Spain, which posts a RevPAR down 11.2% in May. Occupancy rates and average daily rates show a clear drop (–3.2 points and –7% respectively). It may be hoped that the summer season that is beginning will allow Iberian hoteliers to regain the roads to growth.Results by category indicate that all segments held up well. 2*hotels posted a solid progress in the RevPAR by playing on both the occupancy rate (+2.8 points to 73.5%) and evolutions in average daily rates (+4.3% to 64.7 euros incl. All taxes). Consequently, the revenue per available room rose by 8.5% from one year to the next. As in the previous months, the most economic categories (0* and 1*) ensure the evolution of the RevPAR mostly through the maintenance of the sustained growth of average daily rates. In May an increase in occupancy rates that reach new heights may also be observed: +0.6 points to 74.9% in 0* and +2.0 to 75.8% in 1*. The strong growth of the supply at chains in the last months is thus perfectly well absorbed. The mid- and upscale segments, meanwhile, do not renew the evolutions in occupancy rate observed in April when the effect of catching up from one year to the next was much more apparent. We can nonetheless that they remain resolutely directed upwards (1.3% points in 3* and +1.6 point in 4*). As far as average daily rates are concerned, the 3.2% growth observed at upscale properties is all the more significant because it follows a positive evolution that was already recorded in May 2003.On 12 months, the RevPAR is very close to equilibrium at 58.5 euros, down by 0.4%... only, one might add. The occupancy rates nearly reached previous levels (-0.4 point) and average daily rates are very stable (+0.3%). Budget hotels continue to maintain results with progress for the RevPAR by more than 3.5%. The results of 2*, 3* and 4* hotels are still slightly down, but they are far from the drops observed on occasion over the preceding months.The economic recovery announced… and aborted in 2003 is cause for pr udence. Nonetheless, it is necessary to look back to November 2002 to find another 3 consecutive months of growth in the RevPAR. No matter what, the current period once again betrays the formidable adaptability of Europe’s hotel industry. “In terms of our marketing and rate policy, we adapt our week and weekend rates to the clientele-mix. During the week we mostly apply rack and corporate rates. On weekends, a variety of reductions are applicable in order to fill the property. In terms of distribution, we have lost 5% of our Rack Segment clientele to the discount segment,” attests Simona Pasqualin, Sales Manager of the 4* hotel Movenpick Stuttgart Airport, presenting one of the factors in the drop of average daily rates observed in the last months. It is nonetheless at this price that hoteliers were able to contain the drop in occupancy rates, particularly through the use of online reservations . Reservations via Internet is increasingly becoming a reality, up 30% over last year. “We invest much more in our Internet reservation systems: it is a real tool that must be displayed in order to meet new expectations,” pursues Simona Pasqualin.The crisis required changes, that accompanied modifications in the business-mix. The sector professionals’ ability to react is also expressed by the exploration of new markets. Giuseppe Vincelli confirms, “We are beginning to see the Asian market arrive. Chinese and Japanese travellers represent around 5% of clientele. Simultaneously, for nearly 4 years, we have been working to develop a certain number of markets such as the Middle East and Russia, Northern Europe and South America. This works is beginning to truly bear fruit because these new nationalities are increasingly present. We are constantly establishing relations with foreign operators.”From another European angle, John Brennan, General Manager of the 4* Four Seasons hotel in Dublin, agrees: “We are also seeing the Asian and South American markets, which grow incessantly, emerge.”

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