Chain hotels in the UK and Europe have been hit hard by the “rapidly deteriorating” economic conditions and are cutting their rates to shore up business levels, figures released this week suggest.
Paris has been worst affected, as profit fell by 31.7% and occupancy plunged nearly 10% from August to September. The drop put Paris into fourth place in the most profitable cities ranking behind London, Amsterdam and Berlin.
Amsterdam and Vienna also experienced significant drops in demand and profit last month. Average occupancy in the Dutch capital fell by 9% to 80.7% and Vienna’s occupancy dropped to 79.8%.
Of the 10 cities surveyed, only Hamburg saw a growth in profit thanks to visitors to SMM, a biennial shipbuilding trade fair.
“September represents the second consecutive month of falling demand in most European markets, and suggests a rapidly deteriorating trading environment,” said consultants TRI Hospitality managing director Jonathan Langston.
In the UK, figures from accountants PKF showed that occupancy at London hotels dropped 5.7% on last year and room yield (RevPar) declined from £128.95 in 2007 to £119.83 in 2008.
Cardiff also fared badly, seeing a 14.6% fall in room rate, perhaps due to hosting a number of Rugby World Cup matches last year.
But Manchester and Liverpool bucked the trend with a small amount of growth.
Melvin Gold Consultants hotel consultant Melvin Gold said it was a surprise that hotels were only now feeling the effects of the downturn. He said: “Previous downturns show that first occupancy levels fall. Then, in an effort to shore up business levels, hoteliers achieve lower average room rates – often a result of appealing to different and cheaper market segments rather than blatant price cutting.”