Global Hotel Performance: The Three Ranking Tables

Even as the global hospitality industry saw their figures shrink in 2008 and especially during the first part of 2009, several spots in the world continue to offer a ray of hope to hotel revenue managers. Major cities in the Middle East and Europe are leading global hotel sales in terms of revenue per available room (RevPAR), average room rate, and occupancy. Six cities including Abu Dhabi, Dubai, New York, London, Paris, and Tel Aviv continued its strong performance in all three categories.

In 2008, hotel performance saw significant discrepancies in the first and second half of the year. In the first half, hoteliers saw good yield management performance, strong hotel sales, and hotel revenue optimization. During the second half, problems started to occur as consumer confidence took a dive for the worse. In the final quarter of the year, the RevPAR in most regions are already on the negative. Only the Middle East, Central America, and South America showed double-digit RevPAR hotel sales growth.

Meanwhile, the RevPAR performance in Europe and the Asia Pacific experienced very modest growth at less than 2%. North America had borne the brunt of the crisis experiencing a 1.6% decline. It is clear that the hospitality industry suffered when both individual and corporate consumers cut back on their travel expenses. Europe took 10 spots out of the top 20 cities based on average room rate. It took 7 spots out of the top 20 in terms of RevPAR as well. However, despite strong rankings, figures still look relatively grim. The hotels were down 5.1% at the end of the year.

• Paris – the city was the only one in the Euro Zone to appear in the three ranking tables: average room rate, occupancy, and RevPAR.

• London – performed strongly as well. It also appeared in the three ranking tables. Its occupancy grew by 0.8% as well despite the economic crisis. London has the 5th highest occupancy rate globally. One notable development in the city is that budget hotels experienced strong performance while boutique hotels experienced lower growth.

• Berlin – although it did not appear in the ranking tables, it is still in the positive range. Average room rate increased by 6.2% while occupancy decreased by 2.3%. This resulted to a RevPAR of 3.7%.

The worse is yet to come because deflation is a constant threat to the whole economy. In essence, deflation is likely to occur unless the government takes measures to prevent it. The sharp slowdown in economic activities is bringing the price of commodity items down. Businesses are shifting to lower prices to attract more consumers at the same time.