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Global Economic Slowdown Leads to Corporate Travel Constraints in Europe

Sat, 12/27/2008 - 18:06 — admin

Travel_in_EuropeThe latest HotStars survey, carried out by the TRI Hospitality Consulting, showed that the chain hotels in some of the major cities in Europe registered very tough trading conditions in November. The results showed that all 10 cities that were included in the survey reported a decrease in revenue and profit per available room in comparison with the results registered in October.

It is worth mentioning that the global economic slowdown and the resulting cut in international travel led to significant year-on-year losses in operating profit, which is also known as income before fixed charges (IBFC).

"November was the first month that many companies implemented new restrictions on travel fortheir employees. For hoteliers, in addition to the trips not made, this also meant short-noticecancellations," said Jonathan Langston.

Branded hotels in Amsterdam registered a 37.6 percent drop in income before fixed charges to 58.72 euros per room available (about $82.58), which is the most substantial decrease in profit among other cities featured in the survey. Figures show that the average occupancy in Amsterdam decreased by 15.8 percentage points to reach 69.1 percent. In addition, the average room rate went down by 6.3 percent to reach a point of 165.41 euros (about $232.58).

The marine equipment trade show, also known as METS, which took place every year in the Dutch capital, in 2008 attracted 6.5 percent fewer tourists and exhibitors if compared to 2007. In addition, the Schiphol airport registered decreases in passenger numbers after for a long period of time it previously showed a continuous increase.

Taking into consideration leisure, it should be mentioned that such popular European destinations as Amsterdam, Prague and Vienna reported having less cultural overnights. Because of lack of participants from the United States, hoteliers said that tour groups from America were getting canceled. "In many key markets, falls in occupancy have widened from August onwards and, unfortunately, any rapid reversal of this trend looks increasingly unlikely," said Langston.

 In Austrian capital the occupancy dropped by 12.8 percentage points to reach 63.9 percent, which is the second lowest reported in the survey. Over the last year there were nine new hotels opened in Vienna, which is a further aspect in the intensity of the city's occupancy. There were only three European cities (stated in the survey) that registered an average occupancy over 70 percent. These were: Hamburg, London and Paris. The leading city was London, which reported 81.5 percent occupancy.

Even though some cities reported decreasing volume, there were five other cities that showed an increasing rate. The average room rate in Paris increased by 3.2 percent to reach 212.32 euros (about $298.79), thus proving to be the highest in the survey. Other cities that accounted year-on-year rate increase were Warsaw, Budapest and Hamburg, registering 2.4, 1.9 and 0.9 percent respectively. To conclude the results of the survey: in absolute terms France's capital had the highest daily room sales, reporting 157.86 euros ($222) per available room. The silver medal in the survey went to London, which reported 150.13 euros ($211) per available room. In terms of profit London outran Paris. The hotel market in UK's capital proved to be the most profitable with daily IBFC of 120.06 euros ($168.80) per available room, while Paris had a daily IBFC of 81.10 euros ($114.05) per available room.