Data Show European Hotel Rates Falling

A number of European hotel markets—including Amsterdam, Prague, Paris and several German cities—saw significant room rate drops in May, and some of those drops will continue through next year, according to industry data released in the past week.

TRI Hospitality Consulting's European Chain Hotels Market Review for May, released last week, reported rates and revenues were down in most of the major European markets. Both Amsterdam and Prague saw year-over-year rate declines of more than 20 percent, and deluxe hotel rates in Paris were down 13.7 percent, according to TRI.

One city bucking that trend is Warsaw. Hoteliers in the Polish capital continued to raise rates year-over-year by 3.7 percent despite an 8-percentage-point drop in occupancy, according to TRI. This, however, means Warsaw could see revenue recovery more quickly once the economy turns around, the firm reported.

May rate drops were more modest in most German cities, according to the May 2009 Hotel Market Forecast report released yesterday by Smith Travel Research Global. Berlin, Hamburg, Munich and Stuttgart all saw year-over-year rate decreases in the 4 percent to 8 percent range. The steepest drop was in Düsseldorf, where rates dropped between 19 percent and 22 percent.

Occupancy, however, is expected to continue to decline in most German cities except Hamburg and Munich next year, and STR Global is forecasting for rate declines to continue in all the major German cities. The steepest drops are forecast for Cologne, where May 2010 rates are expected to drop between 9 percent and 11 percent. Most other cities will see drops on average in the 3 percent to 5 percent range, according to STR Global.