July was a mixed month for European chain hotels, with year-on-year profit growth in half of the cities surveyed by TRI Hospitality Consulting’s latest HotStats report. Income before fixed charges (IBFC) – also known as gross operating profit – increased in Budapest, Hamburg, London, Munich and Paris.

The German cities of Munich and Hamburg stood out as the only markets to report a year-on-year increase in demand. In Munich, the sample of four and five-star international chain hotels reported average occupancy up by 1.3 percentage points to 82.1 per cent, the second highest in the survey.

“There were three main reasons for Munich’s strong performance. Unlike the rest of Germany, July remains a full-business month because the Bavarian school holidays start in August; an opera festival fuelled strong rate growth for city centre hotels; and leisure demand from the Middle East remained buoyant,” said Charles Scudamore, director, TRI Hospitality Consulting.

The Middle East is an increasingly important source market for Munich’s hotels particularly in the summer. Overnight stays were up by 38 per cent to 253,000 last year, according to the city’s tourist office, with wealthy Middle Eastern visitors escaping the heat at home to use Munich’s medical and leisure facilities.

Munich was the third most profitable city in the survey with daily IBFC up by 40.9 per cent to €61.27 per available room. This was largely the result of the highest rate growth in the survey – up 20.2 per cent to €128.38 per available room, which also pushed payroll down by 3.6 percentage points to 28 per cent of total revenue, the second lowest in the survey.

Drop in leisure demand in Amsterdam

The largest fall in demand was reported in Amsterdam where average occupancy dropped by 10.9 percentage points to 74 per cent, primarily due to a reduction in leisure visitors from North America and the UK.

Leisure demand accounts for 40 per cent of annual overnight stays in Amsterdam, the proportion being higher in the city centre during summer. Around 36 per cent of total visitors are from the UK and North America, according to the city’s tourist board.

For more information contact:
Charles Scudamore, director
020 7486 5191
charles.scudamore@trihc.com