The European hotel market approached prepandemic levels of revenue per available room ( RevPAR ) entering 2023 driven by strong leisure demand and soaring room rates that helped offset the impacts of inflation .
Although a dip in January is not unusual for the market , gross operating profit per available room ( GOPPAR ) in the first month of the year fell 29 % compared to 2019 , according to data from benchmarking firm HotStats . Germany and the Netherlands , in particular , fell 83 % and 59 %, respectively , while the UK saw a decrease of 35 %.
“ In one month , we went from being recovered , as we had been for a good sixmonth period , to 29 % down on the same time in 2019 , which is a real indicator of what could happen if the rate doesn ’ t continue to grow or at least stabilize where it is now . If it falls off , it ’ s going to impact the bottom line ,” said HotStats COO Michael Grove .
CBRE ’ s “ 2023 Global Hotels Outlook ” indicated that occupancy growth could be muted by a recession ; however , it predicted that relaxed travel restrictions in China will boost demand across Europe and an increase in business travel should balance out any potential leisure slowdown .
Leisure continues to lead the recovery , making up 21 % of hotel occupancies in the UK . Meanwhile , meetings and events are “ getting back to their natural cadence ,” said Kenneth Hatton , managing director , head of hotels , Europe at CBRE .
“ Wary of the economic outlook , you will see travel budgets somewhat being managed ,” he said . “ On the other hand , the need for teams to get back together seems more pressing than ever . Fewer days in the office means there ’ s a need to make sure that the culture of that company or group is copper fastened through in-person time .”
Despite inflationary pressures hitting purse strings , it ’ s still expected to be a strong summer , particularly for European resorts .
The Canary and Balearic Islands , for instance , saw profitability up 18 % last year compared to 2019 and a margin increase of 1.7 percentage points , despite increasing labor and utility costs . However , the latter is hitting hotel margins across Europe , with energy costs creeping to more than 10 % of hotels ’ total revenue , impacted by the war in Ukraine .
PROFIT PRESSURE GOP margin for the rolling six months
22 hotelsmag . com May 2023