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Moscow most profitable city for hotels

31 July 2006

Moscow was the most profitable city in which to run a hotel in the six months to June, according to the latest survey of 10 European cities by Tri Hospitality Consulting.

Russian hoteliers achieved an income before fixed charges per available room (IBFCpar) of €130.38 (£89.16) in the first half of the year despite turning in the lowest occupancy, of 66.7%.

Their winning formula stemmed the combination of the second highest average room rate in the survey at €188.66 (£129) and the lowest payroll costs, which represented 20.3% of turnover.

Paris hotels enjoyed the highest revenue per available room at €143.26 (£97.98) and the highest room rate at €190.73 (£130).

High labour costs, however, gobbled up 40% of turnover and cut profitability per available room to just €69.44 (£47.49).

A more balanced performance put London hotels second in the profitability stakes with an IBFCpar of €91.95 (£62.88).

They achieved the second highest occupancy (80.4%), the third best room rate of €175.99 (£120.36) and the third lowest payroll costs, which represented 22% of turnover.

The World Cup gave German cities the biggest boost to profitability during the month of June.

Income before fixed costs rose by 96.6% in Berlin, by 63.1% in Hamburg and by 22.5% in Munich (despite the city's 13.9 percentage point drop in occupancy).

Nevertheless, Moscow hotels were more than twice as profitable as those in Berlin in spite of the extra business generated by the increased football.

You can view the tables for Tri's monthly European hotel survey here >>

By Angela Frewin

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