Continental European hotels are on the way to recovery with Germany and Eastern Europe leading the way, according to Deloitte's Profitability HotelBenchmark Survey.
The survey reported a 7% growth in profit per available room in 2004 for hotels on the continent, after three years of declining profitability.
Hotels on average generated 15,000 profit per available room in 2004 compared with 14,000 in 2003.
Germany, said the report, was boosted by the biennial trade fair cycle with Dusseldorf enjoying a “staggering” 76% leap in profits per available room and Stuttgart a 17% increase.
Eastern Europe also reported double digital growth in profits per available room, with Prague and Budapest reporting respectively increases of 20% and 19%.
But it was Moscow which took the top spot for converting revenue to profit among the 23 cities Deloitte surveyed. Its conversion rate was 53% compared with Brussels' rate of just 22%.
The survey said that Moscow enjoyed the advantages of upmarket and luxury properties which drew high rates and low operating costs. It also received revenues in US dollars but paid costs in local roubles.
Cities which did less well than the average were Warsaw where over capacity saw profits per available room fall by 6% and Madrid where over supply saw profits drop by 12%.
The worst performing city however was Milan which saw a 13% fall in profits per room.
Julia Felton, executive director of HotelBenchmark at Deloitte said: “The profitability figures for Continental Europe are very encouraging and highlight the diversity that exists within the European hotel market.
“From an operator perspective, top-line revenue growth bodes well for base management fees, whilst the conversion of revenues to profit should also be positive for incentive management fees.
“As a result, we anticipate continued interest in Europe from an investment and management perspective. Mature, stable markets continue to offer reduced risk whilst areas such as Eastern Europe offer potentially greater rewards.”
The Deloitte survey did not cover the UK.