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European hotel rates down 5 per cent in July, says HotStats

Mainland Europe hotels saw a 5 per cent decline in average room rate to €170.60 in July, according to data from HotStats.

Gross operating profit per available room (GOPPAR) was down by 9.4 per cent year on year. In addition to being the sixth month of year-on-year GOPPAR decrease in the region since the beginning of 2019, it was also one of the greatest months of profit decline this year.

“The drop in average room rate is disconcerting,” said Michael Grove, managing director, EMEA, at HotStats. “Especially since it’s the second consecutive month that rate has dropped year on year, after positive rate growth in the subsequent five months of the year and all of 2018.”

For hotels in Moscow, it was a case of hotel rates returning to normal levels after last year’s 2018 FIFA Men’s World Cup, as average room rate fell by €157.06 year on year to €92.86. However, hotels in the Russian capital did successfully record the highest room occupancy of the year so far, at 87.9 per cent.

In contrast to the regional falls in room rate, hotels in Nice saw a typical summer increase as room occupancy hit 90.2 per cent and a high was recorded in average room rate at €267.92.

Elsewhere in the world, hotel rates in the Middle East and North Africa (MENA) fell to €119.19 with occupancy at 67 per cent. Hotels in Dubai were among those experiencing the biggest falls, with average rates seeing a 10.3 per cent decrease year-on-year.

“Profit decline in MENA has now become a trend rather than a blip,” said Grove. “With average room rate showing no sign of negative year-over-year letup, hoteliers will have to find cost-cutting measures to obtain positive GOPPAR increases in the interim.”

It was a different story across the pond, where hotels in the US saw a 0.9 per cent rise in average room rate to $201.51 and a 0.6 percentage point jump in occupancy to 81.1 per cent.

“Hotels in the US are bucking global profit trends, with only three months over the last 22 when GOPPAR turned negative,” said David Eisen, director of hotel intelligence, Americas, at HotStats. “Operators are doing an admirable job of making sure top-line gains result in bottom-line success, but they will need to continue to drive flow through in order to maintain and keep these gains afloat.”