Europe

European Hotels Feel Recession's Pinch


Hotels in Europe are starting to feel the pinch from the recession, with occupancy rates plummeting and service providers harder to find.

A note in the lobby of a two-star Parisian last week-end best illustrated the struggles the industry was facing.

"Hotel Prince Monceau is awfully sorry and we do apologize for not being able to give more towels to its guests but this is beyond our control. Unfortunately, our supplier of sheets and towels, due to the economic crisis, has to face several problems and informed us that they won't be able to provide us with clean sheets and towels this weekend," the note read.

The hotel was trying to change the supplier, but this would "take time", the manager explained.

While many European hotels last year managed to return profits, 2009 is set for net losses.

Occupancy rates in European hotels dropped 8.9 percent in the first three months of the 2009 compared to the same period last year. According to STR Global, an industry research group, hotels in eastern and southern Europe were dealt an even bigger blow, down 19 and 16 percent, respectively.

Hotels in Europe's largest cities have been particularly badly hit by declining business and travel tourism, with the revenue per available room dropping 23 percent in the first quarter compared to last year. Madrid hotels saw this revenue drop 27 percent, Parisian hotels 19 percent and those in Rome 17 percent.

As a consequence, hoteliers are starting to cut room rates, make special offers and discounts. Average daily rates were down 9.6 percent in the first quarter, according to STR Global.

The market in Britain, Spain and Italy look more vulnerable than in France and Germany, Natixis Securities, a Paris-based equity brokerage firm forecast in January.

Despite the crunch, big chains such as Intercontinental, Marriott (MAR) and Starwood (HOT) were now launching niche luxury brands in Europe, in a bid to offer clients more glamour for the money they were prepared to spend on hotels.

Last month, British-based Intercontinental (IHG) opened its first boutique hotel in London, named Indigo.

Marriott International was also launching a boutique brand in 2010, with hotels set to open in Paris, Madrid, as well as Washington, Chicago and Los Angeles.

Sheraton-owner Starwood was the first big chain to open a boutique hotel in New York ten years ago. It now plans to open its first European luxury hotel in Barcelona this year and two in London next year.

Provided by EUobserver—For the latest EU related news


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