European Chain Hotels Market Review – March 2009
London’s new affordability keeps occupancy high
Lower room rates are helping keep London hotel occupancy high, according to the latest European
HotStats survey by TRI Hospitality Consulting.
Out of ten major European cities, London occupancy came top with an average of 76 per cent for
the first three months of 2009, but its average room rate came in fifth place at €140.40. Paris,
Amsterdam, Vienna and Berlin all had higher average room rates than London, but their
occupancies were considerably lower, ranging from just 53.1 per cent in Vienna to 68.8 per cent in
“Price promotions and the low value of sterling are stimulating leisure tourism to London which is
providing some compensation for the fall in corporate bookings. The overall damage to hotel
profits is less pronounced in the English capital than in most other European cities,” said David
Bailey, deputy managing director, TRI Hospitality Consulting.
In the first quarter of 2009 compared to the same period a year earlier, the sample of four and five-
star London hotels reported daily hotel profit – expressed as income before fixed charges (IBFC) –
down by 9.5 per cent to €68.52 per available room.
Elsewhere profits fell more sharply: in Paris by 30.7 per cent; in Amsterdam by 36.6 per cent; and
in Vienna by 47.5 per cent.
Hamburg grows profit and occupancy
Hamburg was the only city in the survey to increase profit and occupancy. IBFC was up by 3.6 per
cent to €31.23 per available room and occupancy rose by 2 percentage points to 64.2 per cent.
“Many Germans opted for short domestic breaks at the start of the year instead of holidaying
abroad. In addition to art exhibitions, musicals and shopping, tourists come to Hamburg to visit
HafenCity, a huge waterfront development of housing, offices and cultural facilities that is destined
to increase the size of Hamburg’s city centre by 40 per cent,” said Bailey.
Tourism in Hamburg has shown strong growth in recent years. Annual overnight stays recorded by
the city tourist board increased from 4.7 million in 2001 to 7.7 million last year.
An important element of both London and Hamburg’s comparatively resilient performances was
good control of payroll costs. In the first quarter of 2009 payroll as a percentage of total revenue
stood at 34.5 per cent in Hamburg compared to 35.2 per cent in Q1 2008. London shaved 0.7
percentage points off its payroll margin, which, at 27 per cent was the absolute lowest in the
Looking at year-on-year performance, Warsaw was the only city to report rate growth in the first
quarter. Average room rate nudged up by 0.7 per cent to €86.58 per cent in the Polish capital.
Good control of payroll costs also contributed to a relatively minor 6.2 per cent decline in profit to
€31.55 per available room.
In absolute terms, London was the most profitable hotel market in the first quarter of 2009,
reporting average daily IBFC of €68.52 per available room. This was some way ahead of the Paris,
the second most profitable city with daily IBFC of €40.31 per available room.
For more information contact:
David Bailey, deputy managing director
020 7486 5191
Ben Walker, research manager
020 7892 2240
Claire King, marketing manager
020 7892 2237
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