Source: TRI Hospitality Consulting - June 29, 2011
Profit per room at hotels in Düsseldorf increased by a staggering 330.9% in May as demand levels soared during the 2011 Eurovision Song Contest, according to the latest HotStats survey by TRI Hospitality Consulting.
Düsseldorf fought off competition from seven other German city bids to host the event including Hamburg, Frankfurt, Munich and the capital Berlin, and the investment in securing the event paid off for the city’s hoteliers.
In addition to the grand final on 14 May, Düsseldorf also hosted two semi-finals for the contest earlier in the week resulting in a broader period of demand for the city. The final was watched by a crowd of 66,000 in the Esprit Arena with an estimated global audience of115 million viewers.
Whilst the strength of demand from Eurovision boosted room occupancy levels by 17.6 percentage points during May to 71.8% from 54.2% in 2010, a staggering 80% growth in achieved average room rate to €167.09 resulted in an increase in Revenue per AvailableRoom (RevPAR) of close to 140%.
In addition to the growth in rooms revenue, year-onyear food and beverage revenue increased by 50% to €27.07 per available room. The significant increases in revenue reflected positively on payroll levels which were down by 16.6 percentage points to 21.7 from38.3% of total revenue.
As a result of the movement in revenue and cost levels, Gross Operating Profit per Available Room (GOPPAR) in Düsseldorf increased by 330.9% to €79.68 from €18.49 during the same period in 2010, equivalent to a profit conversion of approximately 50% of total revenue.
“Due to its reliance on demand from conference and exhibitions, hoteliers in Düsseldorf suffered massive declines in headline performance levels at the onset of the current economic downturn. However, volume and price have recovered over the last 12 months and the Eurovision has assured the city’s hoteliers are back on song,” said Jonathan Langston, managing director, TRI Hospitality Consulting.
International events ensure hotel profits remain positive for major cities across Europe
Increases in profit per room at chain hotels in Europe’s major cities remained significant in May primarily due to major international events, according to the latest Hot-Stats survey.
Events in London, including the state visit by the US President Barack Obama, the RHS Chelsea Flower Show and the Champions League Final at Wembley, enabled London hoteliers to leverage price, which led to a year-on-year increase in profit per room of 16.2% to €103.57 from €89.14 in 2010. And whilst London continues to perform strongly, the city was left in the wake of high-flyers such as Paris, Amsterdam and Istanbul this month.
Thanks to a strong showing from the leisure sector as well as the city burgeoning with visitors to Roland Garros for the French Open tennis tournament, May is typically a strong month in Paris and this year was no exception. A year-on-year increase in RevPAR of 11.7% to €192.09 contributed to a growth in GOPPAR of 16.8% to €105.23.
This was due in part to a 2.1 percentage point reduction in payroll levels to 35.4% of total revenue and positioned Paris as the third most profitable city in Europe. Amsterdam continued its resurgence recording the highest room occupancy level of the sample at 85.6% an increase of 6.2 percentage points compared to the same period in 2010.
And thanks to additional increases in average room rate (+9.8%), food and beverage revenue per available room (+22%) and meeting revenue per available room (+50%), hotels in Amsterdam recorded a profit per room increase of more than 35% to €110.54.
In Istanbul the United Nations Conference on the Least Developed Countries and the Turkish Grand Prix helped hoteliers in the city to achieve the highest headline performance levels in the sample. At €312.17, achieved average room rate at hotels in Istanbul was significantly above Paris, the second highest achieving city in the sample at €226.49, with room occupancy levels remaining above 80% despite a year-on-year decline of 3.9 percentage points from May 2010.
Despite rooms revenue at hotels in Istanbul contributing only 60% to total revenue, compared to cities such as London (approximately 73%), Barcelona (74%) and Paris (70%), profit conversion in the city was approximately 60% of total revenue. Due to payroll levels of just 18.7% of total revenue in May, hotels in Istanbul were able to achieve a profit per room of €242.45.
