As a group, German hotels in the first half of 2003 saw revPAR grow compared to 2002 in just one of the first six months of 2003, leading to an overall 7% decline through the first six months of the year, according to the report.
Of the 50 markets surveyed by Deloitte & Touche, only four cities reported any positive revPAR growth during the half of the year. All other cities tracked on the survey reported a decline in revPAR during this period, with seven markets experiencing double-digit falls.
The four cities that did report revPAR growth over 2002-- Bremen (1%), Hannover(8%), Schwerin(5%) and Rostock(8%)-- benefited from non-annual congresses and fairs that occurred in 2003 but not in 2002. The opposite is generally true for those markets that saw revPAR drop significantly.
Worst hit were hotels in Dusseldorf, where two major triennial fairs (Interpack and EuroShop) occurred in February and April 2002 but not in 2003. Dusseldorf experienced a 26% fall in revPAR during the first half of 2003 compared to the prior year.
The cause of the revPAR weakness is due to a 5% decline in average room rates, to $88.96, and a 2% decline in average occupancy, to 56%. The situation has per-room income before fixed charges off 11% from the year-earlier period and per room profits at just $4,733.
"The outlook may have improved slightly for some German cities, but with continuous weak predictions for the German economy, the hotel market looks set to continue to under perform its European counterparts," says Bernd Geyer, CEO of the German Hotel Association. "Luckily, hotels in German holiday regions and resort hotels appear to be benefiting this summer from increased domestic demand and this should be reflected in their performance numbers at the end of the summer."
Although the latest publication from the German Institute for Economic Research indicates some positive sentiment is returning to the market--mostly due to some major congresses and fairs for some cities in 2004--overall it believes that growth will be stagnant during 2003; an improvement is not forecasted until third quarter 2004.
Julia Felton, Executive Director of the HotelBenchmark Team at Deloitte & Touche believes, "that the German hotel market will not experience any real growth until 2005, and then recovery is very dependant on an overall improvement in macro-economic conditions. Seasonally adjusted revPAR performance for the German hotel industry reveals negative revPAR growth since December 2001, which leads us to believe that a recovery in revPAR will take some time."
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