Hospitality Benchmark 2013

Transcription

1 travel, leisure & tourism Hospitality Benchmark 2013 Figures make it clear! kpmg.nl Jos Sweers Ilse de Graaff

2 Contents Foreword 1 About the authors 2 Introduction 3 Methodology 4 1 Market indicators Key ratios Market segmentation Ownership structure Personnel 15 2 Benchmark analysis Benchmark analysis from 2012/2011/ Outlook for Market developments Financing and refinancing Loyalty programmes 26 Explanation of terms used 29 About KPMG in the Netherlands 30 b KPMG, 7/2011 Amstelveen, august 2013

3 Foreword For the ninth consecutive year, KPMG s Travel, Leisure & Tourism Group presents its annual Hospitality Benchmark. We would sincerely like to thank all the 220 participating hotels for their contributions that have once more enabled the Hospitality Benchmark to be created. This report will allow you to compare the results of your own organisation with the recorded benchmarks for the Netherlands as a whole, the Amsterdam and Schiphol region, and the rest of the country. In addition, the report provides insight into market developments and we present you with our vision of the market in the coming three years. We hope that you will enjoy this report and trust that our study will help you develop your own vision regarding the hospitality market. If you would like to exchange ideas about the vision behind the figures or any of the other topics in this report, you will find a professional partner in KPMG. Jos Sweers Travel, Leisure & Tourism Segment Leader KPMG Accountants N.V. sweers.jos@kpmg.nl Ilse de Graaff Travel, Leisure & Tourism Senior Manager KPMG Accountants N.V. degraaff.ilse@kpmg.nl Hospitality Benchmark

4 About the authors Jos Sweers and Ilse de Graaff have been working as accountants in KPMG s Travel, Leisure & Tourism Group a number of years. Jos heads a multi-disciplinary team that besides audits of financial statements, handles audit-related engagements and advisory engagements relating to strategic and tactical issues, such as financing issues, mergers and acquisitions, centralisation, outsourcing, feasibility studies and distribution management. Jos and Ilse share a passion for the hotel industry. Each year, together with their team, they publish the KPMG Hospitality Benchmark report. This report includes a benchmark for hotel revenue and cost patterns. In addition, the authors outline their vision with respect to developments in the hotel market. Both their activities and this report are consistent with the core activity of the Travel, Leisure & Tourism Group: reinforcing and sharing KPMG s knowledge of the hospitality sector. About the authors Introduction

5 Introduction As in previous years, our 2013 study of the hotel sector was conducted in the second quarter of the year. Many hotels have again participated in the study this year. We greatly appreciate your contribution to our research! A comprehensive and reliable benchmark helps hotels form a picture of their position in the market in these difficult economic times. We continue to provide this sector report free of charge. This KPMG Hospitality Benchmark report consists of three parts: 1 Market indicators 2 Benchmark analysis 3 Outlook for The first part of the report provides insight into the development of the key ratios used to manage organisations. Segmentation at various levels, such as star rating, location, room size and price band, will help you compare your organisation with other organisations in the sector. The second part of the Hospitality Benchmark report consists of the benchmark analysis, which allows you to compare your profit and loss account to that of other hotels in the market. The profit and loss account is presented as a percentage of total sales revenue. The various segmentation levels allow you to reliably assess your hotel s development. In addition, the benchmark enables you to test and, where necessary, improve your budgeting process. In the final part of the report, we present our outlook for Based on our extensive experience in the hotel market, we use this report to share our vision regarding the future of the sector. The development of the market is the recurring theme. This year, we also include information on the anticipated future impact of financing, re-financing and loyalty programmes. Hospitality Benchmark

6 Methodology Each year, KPMG s Travel, Leisure & Tourism Group conducts a large-scale benchmark study in the Dutch hospitality market. The report is created by means of a quantitative study. A structured questionnaire makes it possible to compare the figures with previous years and thus ensure their validity. The data have not been audited. Approximately 1,580 hotels in the three-, four- and five-star hotel segment are registered with the Chamber of Commerce in the Netherlands. We then approached approximately 1,000 three-, four- and five-star hotels in the Netherlands with 20 or more rooms. Of those, 22% completed and returned the survey. First we classify the information obtained by size of the respective hotel organisations. Breakdown of participants Number of hotels Number of rooms Average number of rooms per hotel Total Province Groningen, Friesland and Drenthe Overijssel Gelderland Utrecht and Flevoland Noord-Holland Zuid-Holland Zeeland Noord-Brabant Limburg Size < 50 rooms rooms roms > 150 roms Location Amsterdam + Schiphol Other Star rating Three stars Four stars Five stars Price band < > Methodology

7 The response rate of 22% represents approximately 26% of the capacity (based on the room count) of the accommodation-providing businesses in the three-, four- and five-star market segment. Together, the 220 hotels that participated account for 25,283 rooms. The market for hotels with a star rating has a total capacity of approximately 108,500 rooms. Approximately 98,000 of these rooms are in the three-, fourand five-star market segment. Noord-Holland, with a share of over 26% of participating hotels, is the largest participating province. Compared to last year, a decline can be seen in the number of participating hotels. Nevertheless, there is a balanced distribution across the provinces. The adjacent table shows the sample classified by management form and property management. It is important to note that it is not our intention to draw conclusions regarding the entire population of accommodationproviding businesses. Instead, we aim to provide guidance for interpreting trends in the hotel sector. Respondents by property management (%) Ownership Lease Hospitality Benchmark

8 1 Market indicators 1.1 Key ratios The key ratios for hotel organisations (occupancy rate, average room rate, revenue per available room (RevPAR) and total revenue per room) are shown in the accompanying table, segmented by region, room size, star rating and price band. In the current downturn caused by the recession, the hotel sector remains hopeful for a recovery in the market. We saw no clear signs of market recovery in 2012, with the year being very similar to Thus, the room rates nationwide rose marginally from EUR 90 to EUR 92, the occupancy rate fell marginally by 0.7 percentage points to 64.5%.this results in a stabilized RevPAR of EUR 60. However, total revenue per room in 2012 increased slightly by 4.7% to EUR 41,572 per room. We do not see the stabilisation in occupancy rate, room rate and RevPAR reflected in all regions. In part of the hotel sector, a decrease in the key ratios has continued unabated since The main losers in 2012 were Utrecht and Flevoland with considerable downturns. Both a decrease in occupancy rate and a decrease in average room rate meant that there was a substantial decrease in RevPAR. The occupancy rate declined slightly in the region by 6.4 percentage points to 57.9% and the average room rate also fell slightly by EUR 3 to EUR 75 in The RevPAR declined from EUR 50 in 2011 to EUR 44 in The hotels in Noord-Brabant and Zeeland also experienced a downturn in the RevPAR with a marked decline of 7.7% and 8.0% respectively. The province of Noord-Holland, which historically always shows all the best figures, had a good year in The hotels here saw the occupancy grow marginally to 75.1%. The average room rate rose slightly to EUR 122, resulting in the RevPAR increasing by 6.8% to EUR 91 in 2012 compared to EUR 86 in What is unusual here is that this growth seems mainly to have been achieved in the province itself. The occupation rate in the Amsterdam-Schiphol region actually decreased by 1.4 percentage points to 76.3%. Because the room rate in this region only increased minimally, the RevPAR decreased slightly by 2% to EUR 95. However, the hotels in the capital city with an average room rate of EUR 126 a night remain more expensive than the hotels in the rest of the country. Despite the hopeful improvement expected in 2011, it appears that there has not yet been a full recovery in Amsterdam, partly due to the large number of new hotels. Since the first signs of recovery are usually seen in the Randstad region [the Western Netherlands conurbation], we currently do not yet expect any market recovery. It was also noticeable in 2012 that especially small hotels (less than 50 rooms) performed well. This group of hotels showed an increase in RevPAR of 14% to EUR 60. The originality and personal service, which is often associated with boutique hotels, are appreciated by the guests. This is consistent with the trend that experience and having a unique concept is becoming increasingly more important in the hotel industry. Tables and provide a detailed overview of the occupancy rate and the average room rate in 2010, 2011, and What is suprising in these tables is the decline in the average room rate of the three-star hotels in the Amsterdam/ Schiphol region and the increase in average room rate of the five-star hotels. The average room rate at the three-star segment in the Amsterdam/Schiphol region has clearly decreased from EUR 96 in 2011 to EUR 89 in 2012, a decrease of 7%. In the rest of the country, the average room rate has remained fairly 6 1 Market indicators

9 Table 1.1.1: Market indicators Occupancy rate % Average room rate ( ) RevPAR ( ) Total revenue per room ( ) Total 64,5 65,2 63, Province Groningen, Friesland and 58,2 59,3 59, Drenthe Overijssel 63,7 54,4 61, Gelderland 58,0 60,7 60, Utrecht and Flevoland 57,9 64,3 63, Noord-Holland 75,1 74,2 73, Zuid-Holland 64,7 63,9 61, Zeeland 63,8 63,1 64, Noord-Brabant 58,8 62,2 60, Limburg 62,1 60,9 59, Size < 50 rooms 63,0 62,9 61, rooms 63,1 64,7 65, rooms 64,9 64,8 63, > 150 rooms 68,4 70,9 65, Location Amsterdam + Schiphol 76,3 77,7 73, Other 60,8 61,9 61, Star rating Three stars 65,1 64,8 60, Four stars 64,3 65,7 66, Five stars 63,6 63,1 62, Price band < 65 60,0 61,5 61, ,0 62,8 60, ,9 66,3 67, > ,2 71,3 64, Hospitality Benchmark

10 Table 1.1.2: Occupancy rate Occupancy rate (%) Three stars Four stars Five stars Total Three stars Total 65,1 64,3 63,6 64,5 64,8 65,7 63,1 65,2 60,2 66,2 62,3 63,6 Location Amsterdam + Schiphol 78,4 77,0 66,8 76,3 80,5 78,3 67,7 77,7 61,9 77,5 71,2 73,1 Other 59,2 61,4 58,9 60,8 60,8 62,7 55,6 61,9 60,0 63,2 55,0 61,5 Four stars Five stars Total Three stars Four stars Five stars Total Table 1.1.3: Average roomrate Average roomrate ( ) Three stars Four stars Five stars Total Three stars Total Location Amsterdam + Schiphol Other Four stars Five stars Total Three stars Four stars Five stars Total stable compared to One reason for this may lie in the increasing number of hotels in the Amsterdam region. In accordance with the hotel policy, the municipality of Amsterdam wants to increase the number of hotel rooms by 9,000 up to the end of The room rates of five-star hotels rose in 2012 by 8.5% to EUR 234. This increase seems to contradict the current economic downturn, in which we would expect a decline in the price of the luxury segment. As mentioned previously, experience and service play an increasingly more important role. The five-star hotels are appear to be able to respond to this demand. In addition, the guest lists of the five-star hotels tend to be more international, and there is still a group of guests who are less affected by the recession and willing to pay for the service and luxury of a five-star hotel. 1.2 Market segmentation Traditionally, market segmentation in the hotel industry is based on various guest profiles, the main profiles being business and leisure. The table on this page provides insight into market segmentation in from 2010 to To gain insight into the development of the booking behaviour, pages 10 and 11 show a market segmentation across the following distribution channels: Walk-ins Direct contact ( and telephone) Own website Own reservations system Online third party Tour operator/travel agent Auction sites On pages 10 and 11, you will also find a breakdown into the origin of the guest lists. Business/leisure Table shows that the business segment decreased in 2012 compared to the leisure segment. We notice in particular a shift from business individual to leisure individual. This is in line with 8 1 Market indicators

11 Table 1.2.1: Marktsegmentatie Business individual Business group Leisure individual Leisure group Total Province Groningen, Friesland and Drenthe Overijssel Gelderland Utrecht and Flevoland Noord-Holland Zuid-Holland Zeeland Noord-Brabant Limburg Star rating Three stars Four stars Five stars our expectations, more and more companies are economizing on hotel stays of personnel. Area of origin Table provides insight into guests area of origin. Domestic guests remain the main buyers of hotel stays, followed by the Western European guests and Americans in third place. increase of 15%. This seems to be mainly at the expense of direct contact with the hotel and bookings via its own website. The increase has mainly occurred in the four-star and five-star segment and we expect that this increase will continue during the coming years. Market segmentation by distribution channels In 2012, in line with our expectations, we see a continued increase in the share of online third parties and auction sites. Last year, 33.8% of bookings were made through these parties, an Hospitality Benchmark

12 Table 1.2.2: Market segmentation by area of origin Area of origin Netherlands Western Europe (including UK) Eastern Europe (including Russia) Total 56,0 56,2 57,8 28,9 26,2 26,3 4,4 5,2 4,2 Province Groningen, Friesland and Drenthe 76,7 74,4 76,3 16,7 17,9 18,8 2,5 2,4 1,8 Overijssel 83,8 69,3 84,6 10,2 20,8 11,2 3,4 4,4 1,6 Gelderland 73,3 76,5 74,9 15,8 12,2 15,5 2,5 3,7 2,5 Utrecht and Flevoland 67,0 63,6 59,1 23,5 16,8 24,6 3,2 11,4 3,3 Noord-Holland 20,3 31,0 28,5 49,0 38,1 39,6 7,4 6,6 7,3 Zuid-Holland 51,7 55,8 55,3 35,1 26,4 27,0 2,8 5,9 3,7 Zeeland 49,2 52,0 48,2 45,2 45,0 41,0 1,8 0,7 6,1 Noord-Brabant 58,0 55,0 57,3 24,0 25,1 26,4 10,4 6,9 4,3 Limburg 63,6 70,8 72,2 23,5 20,5 18,9 4,6 2,6 3,4 Star rating Three stars 48,6 54,5 60,5 31,5 27,6 26,8 6,4 5,6 4,7 Four stars 59,9 58,8 57,4 28,4 25,2 25,4 3,6 4,9 3,8 Five stars 56,7 40,5 45,8 24,5 28,5 30,5 3,5 5,1 4,4 Location Amsterdam + Schiphol 18,3 26,6 26,7 49,9 37,5 38,7 7,6 7,5 7,4 Other 65,5 63,6 64,4 23,7 23,4 23,6 3,6 4,6 3,5 Table 1.2.3: Market segmentation by distribution channel Distribution channel Walk-ins Direct contact Own website Total 4,9 4,9 4,2 32,4 34,3 37,6 11,9 15,0 15,4 Province Groningen, Friesland and Drenthe 2,4 3,6 4,8 47,6 44,4 43,6 12,3 15,7 11,8 Overijssel 1,8 3,1 4,6 41,0 39,2 62,8 18,5 21,6 7,8 Gelderland 4,0 2,7 2,7 22,2 36,5 42,0 18,0 20,8 18,1 Utrecht and Flevoland 0,8 2,7 3,0 30,3 44,7 31,6 16,0 18,5 25,3 Noord-Holland 3,4 7,0 4,3 28,0 25,8 21,7 9,4 13,8 15,9 Zuid-Holland 11,0 4,1 3,8 31,8 34,9 39,7 13,9 11,2 12,8 Zeeland 7,3 2,5 6,8 36,3 32,4 38,2 11,5 14,9 13,0 Noord-Brabant 5,3 4,4 3,7 43,0 35,7 47,9 10,1 12,1 16,0 Limburg 6,3 6,6 5,2 32,0 35,6 34,6 13,8 11,7 16,2 Star rating Three stars 4,9 5,1 5,0 30,9 33,1 40,4 10,7 14,8 14,6 Four stars 3,3 4,3 3,8 33,9 34,2 36,0 12,4 15,4 16,1 Five stars 18,5 10,3 1,9 27,2 39,6 34,9 13,5 12,7 15, Market indicators

13 Asia United States Africa / Middle East Canada / Australia ,8 4,3 3,2 5,2 5,2 5,6 1,1 1,5 1,4 1,5 1,4 1,5 1,4 1,5 0,9 1,6 2,0 1,7 0,3 0,9 0,2 0,8 0,9 0,3 0,5 3,3 0,8 2,0 1,1 1,4 0,1 0,8 0,2 0,1 0,3 0,2 2,6 4,0 2,5 3,2 2,5 2,6 1,2 0,6 1,2 1,4 0,5 0,8 2,3 3,8 5,1 2,6 2,8 3,9 1,0 1,2 2,9 0,4 0,4 1,1 4,6 7,2 5,6 13,3 11,7 12,9 2,2 2,6 2,3 3,1 2,8 3,8 3,6 4,4 4,4 5,0 3,9 6,7 1,1 1,9 1,7 0,7 1,7 1,2 0,7 0,7 0,8 1,5 0,9 2,4 0,5 0,5 1,2 1,2 0,2 0,3 3,1 5,1 3,1 1,9 5,0 5,5 1,3 1,6 1,6 1,3 1,3 1,8 2,2 2,0 1,8 3,9 2,6 2,8 0,6 0,8 0,5 1,6 0,7 0,4 4,5 5,0 2,4 5,8 4,2 3,4 1,5 1,4 1,2 2,6 1,8 1,0 2,2 3,7 3,5 4,2 4,9 6,6 1,0 1,4 1,6 1,0 1,1 1,7 1,9 6,0 5,6 11,2 16,2 10,8 1,1 2,2 1,2 1,2 1,5 2,0 4,7 8,2 6,2 14,0 13,9 14,8 2,3 2,8 2,0 3,2 3,5 4,2 2,3 3,3 2,6 3,0 3,1 3,7 0,8 1,1 1,3 1,0 0,9 0,9 Own reservation system Online third-party Tour operator / travel agent Auction sites ,9 9,3 9,0 28,9 26,4 23,9 7,1 7,2 7,4 4,9 2,9 2,5 6,3 11,5 10,2 24,1 17,4 24,5 4,1 3,6 3,9 3,2 3,8 1,2 8,1 7,6 3,0 21,8 18,3 13,8 3,8 5,5 3,6 5,0 4,7 4,4 7,8 8,3 9,2 26,4 22,3 20,5 10,5 4,8 5,4 11,1 4,6 2,1 15,3 6,1 21,1 24,2 20,2 15,7 6,8 5,3 2,6 6,7 2,5 0,7 10,9 10,7 8,8 37,4 31,1 30,5 10,2 9,9 15,8 0,7 1,7 3,0 6,4 8,5 12,1 22,9 29,0 22,8 6,6 7,5 7,3 7,5 4,8 1,5 16,0 9,8 4,7 23,2 27,1 29,2 4,5 11,4 6,1 1,2 1,9 2,0 6,7 12,6 8,2 26,3 27,5 19,5 3,7 5,9 3,2 4,9 1,8 1,5 5,1 8,7 4,5 34,4 28,7 26,9 5,7 6,7 7,5 2,6 2,0 5,0 10,2 6,4 7,9 33,1 28,9 22,5 7,6 8,7 5,5 2,6 3,0 4,1 10,6 11,7 10,1 26,1 25,1 24,7 7,2 6,2 8,0 6,5 3,1 1,3 3,0 5,7 7,5 31,3 23,5 26,1 4,0 7,9 13,7 2,5 0,3 0,4 Hospitality Benchmark

14 1.3 Ownership structure Within the hotel industry, we make a distinction between various forms of ownership structure/management forms. In our study, we distinguish between: independent operator without franchise formula (standalone hotel); independent operator with franchise formula; under management of an (international) chain (management contract); part of a chain of private hotels (property and operation using a chain). During the past three years we have noticed a significant increase in the number of participating hotels under management of an (international) chain and a decrease in the percentage of stand-alone hotels (Table 1.3.0). This means that more and more hotels join a chain, with which they can make use of the reputation of a hotel brand and an associated reservation system. It is also possible to achieve savings on personnel costs by centra lising certain functions. Our study also revealed that 62% of the hoteliers believe that it will be increasingly difficult for an individual hotel to survive without affiliating with a renowned hotel brand. Table Forms of exploitation Managed by an international chain Stand alone hotels Part of a chain of own hotels Franchised hotels Market indicators

15 Hospitality Benchmark

16 14 1 Market indicators

17 1.4 Personnel Personnel analysis A large share of the revenue of hotels (on average about 35%) is spent on personnel costs. To improve a hotel s result, it is therefore important to keep these cost items under control, however not at the expense of the staff. This section focuses on personnel and includes various personnel analyses, which are segmented by number of rooms and star rating. At the total level, the number of FTEs decreased in 2012, a trend that began in The decrease in the number of FTEs in 2012 was the strongest in the five-star hotels (> 150 rooms) and in the Rooms and F&B depart ments. This is a direct result of outsourcing (Table 1.3.5) the room staff, a trend that has been evident for several years already. In 2012, 74% of the hoteliers stated that house keeping was outsourced, compared to 62% in We also see in practice that there are increasing numbers of zero-hour contracts used, and that chain hotels deploy their staff more efficiently across several hotels. The percentage of personnel costs at the five-star hotels therefore has also decreased from 34% to 33%, despite the collective labour agreement (cao) pay increase in the last quarter of The result is that the total revenue per employee at the five-star hotels increased significantly in This increased pro- Table 1.4.1: Personnel analysis by number of rooms Number of rooms < > 150 Total Department Afdeling Administrative & General (including HR) 1,6 1,9 1,7 2,0 2,9 2,4 2,7 2,7 3,0 4,0 5,0 7,3 2,5 2,8 3,1 Rooms 6,1 4,9 4,2 10,5 9,6 8,6 12,3 12,0 13,8 18,8 29,8 31,2 12,0 9,9 10,1 F&B 7,0 8,5 7,4 15,2 15,9 16,2 15,3 17,4 25,1 25,5 30,7 33,6 16,2 18,1 15,5 Sales & Marketing 1,0 0,9 0,6 1,2 1,4 1,5 1,6 2,2 1,9 3,0 8,1 3,1 1,7 2,0 1,9 Property management & 1,1 0,7 0,5 1,7 1,2 1,1 1,6 1,9 1,8 1,9 4,4 5,8 1,6 1,5 1,5 Maintenance Other departments 0,5 1,6 1,4 2,3 2,3 2,0 2,9 4,2 2,1 3,1 7,4 1,8 2,3 3,0 2,4 Total 17,3 18,5 15,8 33,0 33,3 31,8 36,4 40,4 47,7 56,2 85,4 82,8 36,3 37,3 34,4 Table 1.4.2: Personnel analysis by star rating Number of stars Three stars Four stars Five stars Total Total Department Administrative & General (incl. HR) 0,8 1,6 1,9 2,9 3,1 3,4 3,9 4,8 7,7 2,5 2,8 3,1 Rooms 7,0 4,2 5,3 12,8 11,5 12,3 24,7 24,6 21,2 12,0 9,9 10,1 F&B 8,7 7,5 10,4 17,7 16,5 20,2 29,8 37,3 55,1 16,2 18,1 15,5 Sales & Marketing 0,9 0,7 0,7 1,8 2,2 2,3 2,7 6,2 5,4 1,7 2,0 1,9 Property management & Maintenance 0,9 0,6 0,8 1,8 1,8 1,7 2,2 4,5 3,5 1,6 1,5 1,5 Other departments 1,6 1,5 1,8 2,5 3,3 2,7 3,3 7,0 3,2 2,3 3,0 2,4 Total 19,9 16,1 21,0 39,5 38,4 42,6 66,6 84,4 96,1 36,3 37,3 34,4 Hospitality Benchmark

18 Table 1.4.3: Average payroll costs per FTE (full-time equivalent) (in ) Administrative & HR Rooms F&B Sales & Marketing Property management & Maintenance Total Total Table 1.4.4: Revenue per FTE (full-time equivalent) (in ) Total revenue per employee Total room revenue per room employee Total revenue from F&B per F&B employee Total Star rating Three stars Four stars Five stars Market indicators

19 ductivity is reflected in the absenteeism in the five-star hotels; see Tables and Here we see an increase of 3.5% to 4.1%, an increase of 17.1%. We wonder how much space is left for further cuts in personnel costs? Average payroll costs per FTE The average total payroll costs per FTE remained stable in However we notice differences between departments. For example, take the average payroll costs for the Administration and HR department decreased by 4.4%. This is consistent with our expectation that administrative personnel will decrease due to the previously identified centralization of functions by chain hotels. Administration and HR lend themselves perfectly for this. The average payroll costs per FTE for the Sales and Marketing department continued to increase this year. This is a logical development from a greater focus on increasing sales revenue, which has led to additional sales activities. Revenue per FTE Looking at the total revenue per FTE, it appears that hotels have improved their efficiency. The slight increase in RevPAR and a decrease in the total number of employees have resulted in the total revenue per employee increasing. The hotels also saw the total revenue from F & B per F & B employee increase in The reasons for this are partly a reduction in the workforce and the associated decrease in personnel costs. Absenteeism Absenteeism has decreased across the board by 9.4% compared to The largest decrease was observed in the medium-sized hotels ( rooms), which saw its absenteeism fall by 23% in the segment. One reason for this may be the increase in the outsourcing of services. We observed a stabilisation in the decline of the absenteeism rate in the smaller hotels (<50 rooms) and the large hotels ( rooms). Absenteeism per star rating shows that absenteeism at the five-star hotels is the highest with 4.1% and an increase compared to last year by 17.1%. As stated previously, this could be associated with the increased workload at the five-star hotels. Table 1.4.5: Outsourcing (in %) No Outsourcing outsourcing Star rating 26% 38% 74% 62% Three stars 27% 57% 73% 43% Four stars 25% 36% 75% 64% Five stars 25% 20% 75% 80% Size 25% 37% 75% 63% < 50 41% 67% 59% 33% % 29% 79% 71% % 24% 87% 76% > % 29% 76% 71% Roomrate 26% 40% 74% 60% <65 21% 30% 79% 70% % 50% 70% 50% % 48% 72% 52% >105 24% 33% 76% 67% Table 1.4.6: Absenteeism by star rating (in %) Absenteeism Total 2,9 3,2 3,9 Star rating Three stars 2,7 3,2 3,5 Four stars 2,8 3,2 4,1 Five stars 4,1 3,5 3,9 Table 1.4.7: Absenteeism by number of rooms (in %) Absenteeism Total 2,9 3,2 3,9 Size < 50 rooms 2,8 2,7 3, rooms 3,0 3,9 4, rooms 2,8 2,7 3,3 > 150 rooms 2,7 3,3 3,4 Hospitality Benchmark

20 2 Benchmark analysis 2.1 Benchmark analysis 2012/2011/2010 The second part of the KPMG Hospitality Benchmark report consists of the benchmark analysis. Here you will find four profit and loss accounts, segmented by region, number of rooms, star rating, and to price band. With the assistance of the benchmark you can compare your results with the study results and assess how your organisation is developing relative to the market. Table 2.1 Profit and loss account by region (in %) Groningen, Friesland and Drenthe Overijssel Gelderland Utrecht and Flevoland Revenues Rooms F&B Halls Other Total revenue Cost of sales (excluding personnel costs) Rooms F&B Other Total cost of sales Personnel costs (including social security charges, etc.) Rooms F&B Administrative & General & HR Sales & Marketing Property management & Maintenance Total personnel costs Unallocated operating costs Administrative & General Sales & Marketing Property management & Maintenance Other Total unallocated operating costs Total costs Revenue for allocation of overheads Benchmark analysis

21 Noord-Holland Zuid-Holland Zeeland Noord-Brabant Limburg Total Hospitality Benchmark

22 Table 2.2: Profit and loss account by number of rooms (in %) < > 150 Total Revenues Rooms F&B Halls Other Total revenue Cost of sales (excluding personnel costs) Rooms F&B Other Total cost of sales Personnel costs (including social security charges, etc.) Rooms F&B Administrative & General & Personnel costs Sales & Marketing Property management & Maintenance Total personnel costs Unallocated operating costs Administrative & General Sales & Marketing Property management & Maintenance Other Total unallocated operating costs Total costs Income before fixed charges Benchmark analysis

23 Table 2.3: Profit and loss account by star rating (in %) Three stars Four stars Five stars Total Revenues Rooms F&B Halls Other Total revenue Cost of sales (excluding personnel costs) Rooms F&B Other Total cost of sales Personnel costs (including social security charges, etc.) Rooms F&B Administrative & General & Personnel costs Sales & Marketing Property management & Maintenance Total personnel costs Unallocated operating costs Administrative & General Sales & Marketing Property management & Maintenance Other Total unallocated operating costs Total costs Income before fixed charges Hospitality Benchmark

24 22 2 Benchmark analysis

25 Table 2.4: Profit and loss account by price band (in %) < > 105 Total Revenues Rooms F&B Halls Other Total revenue Cost of sales (excluding personnel costs) Rooms F&B Other Total cost of sales Personnel costs (including social security charges, etc.) Rooms F&B Administrative & General & Personnel costs Sales & Marketing Property management & Maintenance Total personnel costs Unallocated operating costs Administrative & General Sales & Marketing Property management & Maintenance Other Total unallocated operating costs Total costs Income before fixed charges Hospitality Benchmark

26 3 Outlook for In this part of our report we discuss the outlook for Each year, based on our knowledge of the hotel market, we outline our vision of the future of the sector. Market development is an annually recurring topic, and this year our outlook also covers financing and the use of loyalty programmes. 3.1 Market developments In 2012, the occupancy rate and average room rate stabilised. For the first quarter of 2013, 72% of hoteliers have seen demand for rooms stabilise or decrease compared to the first quarter of In the first quarter of 2013, 75% of hoteliers had an equal or lower room rate compared to the first quarter The crisis and the low confidence of both companies and individuals in the economy are to blame for this. We also do not expect the Dutch hotel world will show any substantial improvement in occupancy rate and average room rate during the coming years. However, we do see bright spots. The cost savings initiated by hoteliers are increasingly starting to take effect. In this context, for example, there is more efficient use of staff, more effective purchasing, as well as lower or more variable leases. The lower interest rate can also lead to lower costs with refinancing. Unfortunately, many hotels are forced to postpone maintenance and investments because of poor results. This is in itself understandable, however dangerous because a downward spiral of lower quality, lower prices and lower results can then be expected. The hotels that can afford it will strike it lucky in if they now renovate and invest because they can purchase cheaper and obtain the best possible benefit when the economy recovers again. Another positive aspect is that more and more hotels are making the extra effort to increase revenues by offering new products and services or tapping into new markets. This is excellent, because the profit recovery should always specifically come from increasing the revenues. This revenue for Dutch hotels is fortunately increasing as a result of guests from those parts of the world where the economy is still doing well, such as the BRIC countries [Brazil, Russia, India and China], Turkey, and the USA. Hotels that are actively busy with social media see the positive effects of this on revenue and number of guests. Good reviews/ratings and swiftly responding to negative customer reactions are becoming increasingly more important. Most large hotels have employees that monitor the social media. The hotels that focus on conferences and training courses remain under pressure. More online training courses, cuts from industry and more training/coaching in the workplace are the main causes of this. We notice that five-star hotels and small hotels (<50 rooms) are gaining in popularity. These hotels respond to the requirement for experience and a high degree of personal attention. Particularly in the large cities, we see more and more competition coming from individuals offering rooms to tourists. On the one hand tourists choose this because it can be cheaper, but on the other because it is also more exciting and more personal. They want not only a product, the overnight stay, but also the experience, seeing the life of the local residents. Besides the growth of bed and breakfast accomodation during recent years, we are now seeing increasing popularity of organisations such as Airbnb, the US online marketplace for private homes/room rental to tourists. Research by this company shows that in 2012 there were 2,500 private individuals in Amsterdam who provided accommodation for 63,000 foreign guests, who stayed for an average of four nights. Hoteliers rightly ask the question of whether the private offering of overnight accommodation is unfair competition? After all, a hotel has to meet all the fire requirements, tax conditions and obtain permits, whereas private individuals have much fewer difficulties with these requirements and the checks on them. Also, the popularity of websites on which private individuals perform international home swaps, often plus car, is increasing. Hotel chains find it difficult to stop this trend, because standardisation, and thus experience and fewer surprises are now 24 3 Outlook for

27 inherent to the efficient management of a chain. Nevertheless, local management of a hotel can continue to try to respond to the individual wishes of its guests as well as offer more experience aspects in its hotel/city. For example, there are already Amsterdam hotels that offer a guest a one-on-one city tour with an Amsterdam resident who likes to show off his city, and thus respond to the specific interests of the guest. The expectations for the Randstad and the Amsterdam/Schiphol region remain moderately optimistic. All the major museums are open again, which is important for the leisure guests. Various travel guidebooks recommend Amsterdam because of the unique offerings of history, culture and entertainment options. To attract business guests, it is advantageous that during the next few years many large conferences are planned and that the economic activity around Amsterdam is maintained. But the increased flow of tourists and business people will indeed be able to choose from a rapidly-increasing supply of hotel rooms in and around Amsterdam. The supply of additional rooms includes both new construction projects and a long list of offices that are being converted into hotels. This additional supply of hotel rooms has a depressing effect on the average room rate and the occupancy rate. However, every supply eventually creates its own demand. We are confident that the market will be able to absorb this extra capacity properly in the longer term. The trend that hotel bookings will increasingly come through online travel agencies and auction sites will not stop during the coming years. For example, no less than 35% of the respondents to our survey stated that the hotel would no longer have existed without online travel agencies. On the one hand, the online travel agents generate additional revenue because those websites bring in extra guests and increase the occupancy rate of the hotel, and on the other, however, this often happens at lower prices plus additional commission costs that must be paid to the intermediaries. Because there are many good websites that show clearly what last-minute rooms are still available, more and more tourists dare to travel to cities without having made a booking in advance. Bookings are therefore made increasingly later, with the danger that hotels feel the need to offer last-minute rooms at lower prices. This means the hotel loses some of its pre-financing to cover the prepaid rooms. 3.2 Financing and refinancing The crisis will end for some independent hotels in a takeover by a capital rich hotel chain, or entering into a franchise/ management contract, or even into bankruptcy. In particular, the financing or refinancing and the business succession of smaller hotels outside the major cities will become increasingly difficult. This market is also facing ever increasing competition from private individuals who rent rooms to tourists. Banks are often reluctant to invest in the cyclically sensitive hotel market. Funding now represents the best chance of success if the hotel is located in a big city, there is affiliation with a major hotel chain, and if more than 40% equity is contributed. Internationally, we have already been seeing for some years that private equity parties play an increasingly important role in financing or refinancing of large hotels. Due to this difficult financing or refinancing, we also see more and more hotel chains that maintain an asset-light strategy, after which they do not own the hotel but do enter into a franchise or management contract with the owner of the bricks and mortar. Existing hotels are also regularly sold and leased back to relieve the burden of debt. The risk of owning property is thus mitigated and the hotelier can focus on its core business, offering accommodation to guests. In addition, the sale of property creates the opportunity to expand the liquidity, so there is once more room for investments. It is also an interesting structure for banks. The solvency of the company can increase and operational ratios can be improved by eliminating the often high depreciation costs and interest expenses. Are there also disadvantages for the hotelier? One of the drawbacks mentioned most often will be the share of control. The owner will have a say in the policy and will ask a substantial fee that is in line with the purchase of the property. The investor will ask for reports and will set targets for the company. Hospitality Benchmark

28 We expect to see an upward trend in the coming years in the number of property transactions. More and more investors see the benefits of hotel property in times of economic downturn. Hoteliers have proved to be reliable partners. Hotels have generally been located in the same place for many years already and have built up a good reputation in the region and even beyond it. This reliability does not go unnoticed. The Travel, Leisure & Tourism Group would like to use its knowledge to guide you in finding a suitable partner for the sale of your property. 3.3 Loyalty programmes Unfortunately it happens regularly: you have booked a hotel, part of a large chain, and when checking in the reception clerk asks: Are you a member of our loyalty programme? How can the reception clerk not know this? How well does the hotelier know his guest? How effective are loyalty programs actually? Do they create loyal customers? The benefits of a loyalty program seem clear: because points are saved, the programme participants book more frequently with the same hotel group. The number of participants in loyalty programmes is therefore considerable: every major hotel group has its own programme. But how active are these participants? The loyalty programmes reward guests who book frequently within a specific period. However, competing hotel chains often provide compensation for the accumulated number of points if the guest switches, which makes switching interesting. The loyalty programmes also rarely provide followup. You will not be missed as a loyal participant and that creates little loyalty. In addition, it also applies that there is no incentive for a participant in the upper class of the loyalty programme to continue to book with the hotel group until the new measurement period has commenced. The participant will always be at the top of the number of points, and there is nothing more to be obtained. Given that each hotel group has its strength in a different region, it could be beneficial for a participant to switch to the loyalty programme of another hotel group. This would therefore lead to rational behaviour. The participant will try to maximise the number of free nights, but the participant will not be loyal as such to a single hotel group. Online booking agencies are now also developing their own loyalty programmes. This may pose a threat to the existing loyalty programmes of hotel groups. After all, the selection is a lot bigger, there are several hotel brands to choose from and the guest has the guarantee that he will pay the lowest price. Loyalty programmes that offer nothing more than just collecting points are therefore increasingly losing their effective ness. How could loyalty programmes then actually lead to loyal customers? What you actually want to achieve as hotel group is that the participant in question is loyal to the brand, and also recommends the hotel brand to friends and shares positive experiences on review sites. After all, today s consumers no longer rely on traditional advertising when it comes to decisions on purchasing. We rely more and more on our social network and review communities and want them to know from them whether a product is good. This is no different in the hotel and travel industry, which explains the growth of review sites. For example, the appreciation of hotel comparison sites is heavily dependent on the choice and purchase. To create truly loyal customers, hotels would have to focus more on improving their management of social media and their community. The existing loyalty programmes must be better integrated with social media and direct marketing. Data and technology must be better deployed and utilised to obtain more insight into the customers. An example could be that the loyal guest is recognised in the row, and then receives a message on his/her smartphone that can be used to check in. However, communication with the guest can also be much more personal. Often the hotels have huge amounts of data available on the travel patterns and preferences of their guests, but these data are very limited or not used to make individual offers to the guest, for example, concerning specific dates or preferences based on past purchases Outlook for

29 Hotel chains that succeed in making their guests into real promoters of their brand are the winners of the future! KPMG can advise you on the use of social media and with converting data into value for your company. Would you like to read more? Visit extreme-digitalisering. Hospitality Benchmark

30 28 Explanation of terms used

31 Explanation of terms used Room revenue This category comprises the sales revenue from guest accommodation. It does not include any sales revenue from the use of available services. F&B revenue This category comprises the sales revenue from food and beverages sold to guests in the restaurant/café or via room service. It does not include revenue from staff purchases. Other revenue This category comprises parking charges, exchange rate gains, and revenue from telephone, laundry and dry cleaning services. Occupancy rate The occupancy rate is calculated by dividing the number of rooms actually occupied during the year by the number of rooms available throughout the year. Average room rate The average room rate is calculated by dividing the room revenue by the total number of rooms occupied during the year. RevPAR The RevPAR (revenue per available room) is calculated by dividing the room revenue by the total number of rooms available during the year. Total revenue per room The total revenue per room is calculated by dividing the total revenue by the total number of rooms. Personnel costs This category comprises the payroll costs of the staff at the department in question. These costs include the statutory social insurance contributions, holiday pay, pension contributions and other related costs. Cost of sales This category comprises the purchase cost of the goods or services sold by the department in question. It does not include the purchase cost of goods or services sold to employees. Unallocated operating costs This category includes other costs such as energy costs, maintenance expenditure, travel expenses and consultancy fees. Income before fixed charges This is calculated by deducting the cost of sales, personnel costs and unallocated operating costs from the total revenue. Hospitality Benchmark