European hotel industry in May: A cautious approach for the upscale segment

2 min reading time

Published on 01/07/08 - Updated on 17/03/22

The month of May is generally very busy, with businessmen and tourists crossing each other’s paths in hotel reception areas. This is particularly true when the 1st of May is a twofold public holiday: Labour Day and the Ascension. The month of May 2008 has confirmed the rule with an average occupancy rate of 72%. But, like last year, the increase of the RevPAR is lower than the annual average (+4.7% vs +5.6%).

Is the growth of the RevPAR for the upscale segment losing speed? The 4* category is affecting global performance. While all other segments post RevPAR increases by more than 5%, the luxury end of the hotel industry is lagging behind with only a 2.9% rise. Although the global activity is more or less the same as last year (+ 0.2 point), hoteliers have chosen a relatively careful pricing strategy in an un-certain economic climate. The average daily rate is up by "only" 2.6%. On the other hand, during the month of May the performance of the Budget and Economy segments are well above the annual average. They have posted a real progression of their average daily rates and customers kept feeding hotels. The 1* category demonstrates its appeal with a 3.3 point rise in occupancy rate. Between a dynamic budget hotel sector and a more cautious upscale segment, the midscale sector maintains its margin of maneuver. The Revenue per available room grows by 7.0%, in line with the annual average.Cock-a-doodle-do! The French and Belgian roosters may sheer together. With Sweden (+15.7%), France (+11.2%) and Belgium (+11.0%) display the best results of this past month of May. These three countries proudly post a double-digit growth for the Revenue per available room. Behind the trio, neighbouring Dutch (+8.8%) and Germans hoteliers (+7.5%) were also very active. If the average daily rate is responsible for the German growth, it is more a stronger occupancy rate, which boosted the Dutch performance. Pour the rest of the European countries, the month of May is more contrasted. United Kingdom and Austria, who usually always post occupancy rates above 77%, have registered a small weakness in their hotel activity compared to last year. Despite the strength of the Madrid market (see page 18), Spain justifies its improvement...

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