European hoteliers breathed a sigh of relief in early May when the European Centre for Disease Prevention and Control (ECDC) announced that region had passed the peak of coronavirus infections. Now comes the hard part: building back revenue and profitability. But if May data is any indication, things are getting better.
As several countries started to loosen some of their lockdown restrictions, the prodigious profit drop in Europe's hotel industry showed a significant deceleration on a month-over-month (MOM) basis.
GOPPAR in May was down 1.2% compared to the previous month, a welcome result in view of the 119.1% and 122.9% MOM plunges recorded in April and March. And even though GOPPAR remains 125.5% below May of 2019, this reduction is an indicator that the region has likely reached the bottom and is embarking on its way to recovery.
Occupancy recorded an uptick of 1.2 percentage points MOM to 7.3%, which resulted in a 17.9% MOM increase in RevPAR. These results are still far from the numbers recorded in May of the previous year, but they are the first signs of recovery in the region. The turning off of most ancillary revenue streams led to a 5.4% MOM decline in TRevPAR, which equals a 94.2% YOY slump.
Labour costs accompanied the hike in occupancy, recording a 1.2% MOM expansion, while overhead costs were cut by 0.9% MOM.
Hoteliers in Europe managed to achieve a 49.7% flex in May, just under the industry standard of 50.0%. Profit conversion in May was recorded at -166.1% of total revenue, down 11.1 percentage points from April and 203.9 percentage points below the same month of the previous year.
(source: HotStats, image: pexels)