Regional hotels resilient in tough year

Hotels in Europe outperformed hotels elsewhere in EMEA last year, but the star performers were regional hotels, according to PKF.

A survey carried out by hotel consultants and accountants, PKF in EMEA and South Asia, found hotels in Europe made an average 18,821 euro profit per room last year, down from 19,587 euro the previous year. This was the smallest drop in profits recorded throughout the survey in the year to 31 March 2002.

The survey reported a tough year for hotels in 2001, particularly in the Middle East, where profits fell 14 percent from the previous year to just under 15,000 euro per room, and occupancy fell 7.9 percent to 54.9 percent.

A second report, the HotelBenchmark Profitability Survey, carried out by Deloitte and Touche found similar results. It reported a 12 percent decrease in profitability for hotels in the Middle East and a six percent decrease in Europe during 2001.

PKF managing director of hotel consultancy services, Melvin Gold told TravelMole that although the picture looked gloomy for the hotel industry, hotels outside major cities performed relatively well last year.

He said: “If you took the poor performance of hotels in the major cities out of the survey, it would be a different picture. Hotels in smaller cities were less affected by global trends and occupancy remained relatively consistent. For example, in the UK, hotels outside London relied 70 or even 80 percent on domestic business, which didn’t fall as much as international business after 11 September.”

Data for 2000 properties in the UK from Active Hotels, provider of online hotel reservations, supports this finding. It found that achieved room rates from on-line bookings fell 28 percent immediately after September 11 in London, but rates in the regions were relatively unaffected. International visitors to London fell almost 69 percent (although this has now largely recovered) but domestic business actually rose as UK residents preferred to take short breaks in the UK rather than risk flying.

Active Hotels chief executive, Andrew Phillipps told TravelMole: “On-line reservations for regional hotels have been a dramatic success story during 2002. Although London bookings have risen significantly, they have lagged the market as a whole. Our company alone now processes over £30 million of reservations per year for regional properties and this is still rising rapidly”.

The Deloitte and Touche survey found similar results, with the UK’ capital performing worst in 2001. London’ hotel profits declined 15 percent on average, while Cardiff was the only UK city to show a rise in profitability, of 15 percent.

Deloitte and Touche travel, tourism and leisure director, Julia Felton said: “Cardiff’s strong performance could be attributed largely to the pull of the Millennium Stadium as a sporting and concert venue”. This attracted international and partciularly domestic business, and boosted hotel occupancy by 12 percent from 2000.

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