‘Cannibalism’ across the Hotel sectors predicts Deloitte
The latest fatalities of the economic crisis are hotel occupancy levels according to a report from financial consultants and commentators, Deloitte.
Hotels have suffered this year from fewer bookings and a drop in revenue. Across Europe, the revenue per available room (revPAR) dropped 1.5 per cent to €76. The occupancy of rooms in European hotels dropped by 1.9 per cent to 67.8 per cent.
The Hospitality Vision report, which is released on a quarterly basis, highlighted August as the turning point for what have been turbulent times for the holiday industry. August provided a wake-up call for businesses overspending on travel expenses and has forced many companies to tighten their belts.
The ensuing financial restriction was reflected starkly in September’s figures with revPAR plummeting across Europe 5.6 per cent in US dollars and 6.7 per cent in euros. Whilst the average room rates remained almost constant, this is not likely to remain the same for long.
Hotels in Dublin, Rome, Frankfurt and Barcelona were all hit hard with revPAR falling by 0 – 10 per cent. Hotels in London also declined although the London occupancy ratings were the best of a bad bunch (81.4 per cent), remaining the highest in Europe.
The UK is now under pressure with average room rates declining by 0.4 per cent. This may not seem like much but it is the first noticeable dip since August 2003, when the industry was desperately trying to recover from the Iraq war and the outbreak of the SARS virus.
If history is anything to go by, then the decrease in average room rates could mark the beginning of a snowballing effect and a price avalanche. Of some consolation to the tourist trade was Liverpool; the European Capital of Culture was the only city in the UK to achieve double digit revPAR growth.
It was not all negative news across the rest of the continent either. Cyprus was the star of the show with the best revPAR in the euro zone increasing 11.8 per cent to €88. Brussels and Paris both proved popular showing revPAR growth, with Paris growing a respectable 5.6 per cent.
The good news for holidaymakers is that those areas where occupancy and revPAR is down should mean cheaper room rates as hotels cut prices to stimulate bookings.
Alex Kyriakidis, a spokesman for Deloitte said: “The hotel operators will be focusing on value for money more than ever before. There will be cannibalism across the segments as consumers become more budget conscious.”
Hotels News posted on 19 November 2008
False
False
