Hotel profits down in 2002
Hotel-operating profits fell across Europe for the second consecutive year during 2002, according to figures from Deloitte & Touche.
The company’s latest HotelBenchmark Survey shows that profitability fell by 8% during 2002, compared with a 6% decrease in 2001. Combined these two years reversed the 16% growth recorded in 2000.
The strength of Sterling compared to the Euro meant that UK hoteliers were once again hit harder with profitability levels falling 9%. Hotels in Germany fared even worse. In Germany profits fell by 14% during 2002 as hoteliers struggled to reduce costs in line with the decline in revenue.
Virtually all the European cities surveyed experienced a decline in profitability and only Birmingham, Cardiff, Edinburgh, Moscow and Leipzig reported any positive growth.
For the second year running Cardiff was the UK’s star performer reporting an 11% jump in profits. This is due to an increased average room rate in the city, which Deloitte & Touche points out is now recognised as both a “sporting and commercial centre”.
In contrast in London discounted room rates designed to attract leisure travellers led to a fall in rooms revenue of 7% and a 12% drop in profits..
Commenting on the results Julia Felton, executive director of the HotelBenchmark Survey at Deloitte & Touche, said: “With little prospect of an improvement on the horizon hoteliers will need to continue to carefully control costs, to ensure that profits levels are not eroded further during 2003”.
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