Budapest’s hotels saw the biggest increase in profitability in May 2008 of the 10 European cities listed in the monthly Europe HotStats survey from TRI Hospitality.
A key driver behind the Hungarian capital’s 34.5% rise in income before fixed charges per available room (IBFCpar) was the 3.7 percentage point drop in payroll as a percentage of turnover to 25.1%.
The survey found that some hotels in Budapest had cut manning levels within the last year and the general manager of one four-star property said he was employing 60 fewer staff than three years ago
“Wage costs have undoubtedly risen since Hungary joined the EU in 2004 and in reaction some streamlining of resources has occurred,” said TRI managing director Jonathan Langston.
“As long as service levels are maintained, our data shows how good wage cost management plays a crucial role in maximising profitability.
Half the cities in the sample (including London) posted a year-on-year fall in profitability – and they were the same five cities that saw a rise in payroll costs.
Bolstered by four major events in May that included a biennial fair for the cleaning industry, Amsterdam emerged as the second most profitable city after London, replacing Paris as the UK capital’s main rival.
The figures are compiled each month by Tri Hospitality Consulting.
Annual HotStats hotel performance data
|Payroll %||+4.7%||27.2%||-0.8 points|
|Payroll %||27.2%||27.5%||-0.3 points|
|Payroll %||25.1%||28.8%||-3.7 points|
|Payroll %||27.6%||29%||-1.4 points|
|Payroll %||25.4%||25.4%||+2.5 points|
|Payroll %||33%||31.8%||+1.2 points|
|Payroll %||38.1%||38.5%||-0.4 points|
|Payroll %||22.2%||17.1%||+5.1 points|
|Payroll %||37.5%||36%||+1.4 points|
|Payroll %||25.4%||24.1%||+1.2 points|
Definition of terms
Occupancy is that proportion of the bedrooms available during the period which are occupied during the period.
Room rate is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Revpar is the total bedroom revenue for the period divided by the total available rooms during the period
Payroll % is the payroll for all hotels in the sample as a percentage of total revenue
IBFCpar is the Income Before Fixed Charges shown per available room