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Full year report reveals decline in profits
European hotels recorded a decline in profits, revenue and occupancy over 2008, according to the latest HotStats survey by TRI Hospitality Consulting.
Although nine out of ten cities reported growth in room rates compared to 2007, only three saw an increase in income before fixed charges (IBFC), or gross operating profit.
Despite the decline, London's hotels had the highest average occupancy at 82.2% with rooms in Paris the most expensive at €218.03 per night.
"Most European hotel markets enjoyed profit growth for the first 8 months of the year, but the rapid downturn in trading since August has affected the full-year data," said David Bailey, TRI's deputy managing director.
Prague's profits were the worst hit with IBFC down 29.7% to €49.91 per room, which is blamed on lower demand for conferences and the banking crisis.
Hotels in the Czech capital traditionally enjoy large numbers of Greek guests at Christmas, said one hotelier.
But political unrest and the recent riots may have prevented Greeks from travelling, said TRI.
Berlin and Budapest reported increased profits, but Hamburg was the only city to see growth in both revenue and occupancy.
Berlin's IBFC was up 1.9% to €56.40 per available room per day. Profits in Budapest and Hamburg were up 5.4% and 2.4% respectively.
But TRI said profits in these cities were up from relatively low bases the previous year.
"These cities were not overly exposed to the banking crisis and their hotels did not enjoy such a trading boom during 2007 compared to other cities, hence the profit increases on the back of relatively modest performances," said Mr Bailey.
TRI attributed Hamburg's 13.4% surge in revenue per available room (RevPAR) for December to a nursing congress and stronger domestic demand.
"The 2008 full-year European data was generally characterised by falls in average occupancy, while average room rate continued to grow," said Mr Bailey.
"The ability to repeat this performance in 2009 would be nothing short of miraculous.
"Yet accepting some fall in demand as a fact of life while protecting room rates as much as possible will be the most successful damage limitation strategy for hoteliers."