Hospitality Benchmark 2012

travel, leisure & tourism

Hospitality Benchmark 2012 Figures make it clear! kpmg.nl

Jos Sweers Ilse de Graaff

Foreword Contents

1

2

3

Foreword

1

About the authors

2

Introduction

3

Methodology

4

Market indicators

6

1.1 Key ratios 1.2 Market segmentation 1.3 Personnel

6 10 15

Benchmark analysis

18

2.1 Benchmark analysis 2011/2010/2009

18

Outlook for 2012-2014

25

Explanation of terms used

28

About KPMG in the Netherlands

30

bKPMG, | 7/2011 Amstelveen, June 2012

© 2012 KPMG Accountants N.V. All rights reserved.

For the eight consecutive year, KPMG’s Travel, Leisure & Tourism sector group presents its annual Hospitality Benchmark. We would like to thank all the hoteliers who contributed to our study for their cooperation. In the current challenging economic circumstances, the Benchmark will give hoteliers insight into key ratios and provide a fresh perspective on the latest developments in the hotel industry.

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. It will also provide insight into market developments and distribution channels.

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 discussion partner in KPMG.

© 2012 KPMG Accountants N.V. All rights reserved.

We hope that you will enjoy this report and trust that our study will help you develop your own vision regarding the hospitality market.

Amstelveen, 30 June 2012

Jos Sweers Ilse de Graaff Travel, Leisure & Tourism Travel, Leisure & Tourism Segment Leader Manager KPMG Accountants N.V. KPMG Accountants N.V. sweers.jos@kpmg.nl degraaff.ilse@kpmg.nl

Hospitality Benchmark 2012 | 1

About the authors

Introduction

Jos Sweers and Ilse de Graaff have been working as accountants in KPMG’s Travel, Leisure & Tourism sector group for a number of years. Jos heads a multi-disciplinary team that handles financial statement audits, audit-related engagements and advisory engage­ ments 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, 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 sector group: reinforcing and sharing KPMG’s knowledge of the hospitality sector.

As in previous years, our 2012 study of the hotel sector was conducted in the second quarter of the year. This year, a record number of hotels participated. We greatly appreciate your contribution to our research! A more extensive and more reliable benchmark will help hoteliers gain insight into their market position in these difficult economic times. As in previous years, we 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 2012-2014 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. This 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 develop­ ment. In addition, the benchmark enables you to test and, where necessary, improve your budgeting process. This year, we have added sales revenue from reception venues to our sales revenue group.

In the final part of the report, we present our outlook for 2012-2014. 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 annually recurring theme.

This year, we also include information on the anticipated future impact of re-financing and the trend towards sustainability.

About the authors | Introduction

© 2012 KPMG Accountants N.V. All rights reserved.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 3

Methodology Each year, KPMG’s Travel, Leisure & Tourism sector group conducts a large-scale benchmark study in the Dutch hospitality market.

The study method is based on directional in-depth interviews (for the purposes of the quantitative research) and surveys.

Approximately 1,400 hotels in the three-, four- and five-star hotel segment are registered with the Chamber of Commerce in the Netherlands.

First we classified the respective hotel organisations by size. We then approached approximately 1,000 three-, four- and five-star hotels in the Netherlands with 20 or more rooms.

Of those, 28% completed and returned the survey. This is a very good result.

Breakdown of participants Number of hotels

Number of rooms

Average number of rooms per hotel

2011

2011

2010

2009

2011

2010

2009

282

28.856

16.011

23.381

102

87

104

Groningen, Friesland en Drenthe

23

1.583

883

1.411

69

63

74

Overijssel

15

1.100

690

806

73

86

62

Gelderland

28

1.973

1.780

1.680

70

66

65

Utrecht en Flevoland

18

1.496

1.009

2.005

83

72

100

Noord-Holland

83

12.414

4.350

9.249

150

114

145

Zuid-Holland

45

5.014

4.050

4.010

111

127

138

Total Province

Zeeland

9

604

790

768

67

72

59

Noord-Brabant

29

2.683

1.358

1.901

93

68

106

Limburg

32

1.989

1.101

1.551

62

55

67

Size < 50 rooms

82

2.708

2.244

2.456

33

33

34

50 - 100 rooms

109

8.216

4.858

5.263

75

76

72

101 - 150 rooms

42

5.227

4.035

4.468

124

119

124

> 150 rooms

49

12.705

4.874

11.194

259

271

254

Location Amsterdam + Schiphol

60

10.111

4.275

7.191

169

122

189

Other

222

18.745

11.736

16.190

84

79

87

Star rating Three stars

99

7.049

4.353

2.963

71

59

51

Four stars

170

20.035

10.247

18.313

118

104

117

Five stars

13

1.772

1.411

2.105

136

128

191

Price band

4 | Methodology

< € 65

61

5.095

3.383

4.091

84

83

97

€ 65 - € 80

81

6.462

3.795

5.508

80

68

90

€ 81 - € 105

82

7.963

5.791

8.275

97

97

102

> € 105

58

9.336

3.042

5.507

161

113

134

© 2012 KPMG Accountants N.V. All rights reserved.

This report was prepared on the basis of the data obtained from the surveys.

The data have not been audited.

The response rate of 28% represents approximately 34% of the capacity (based on the room count) of the accommodation-providing businesses in the three-, four- and five-star market segment. The share of respondents from the Randstad region (the conurbation in the west of the Netherlands) increased by 10% compared to last year. The overall rise in the number of participants meant that there was a major increase in the number of participants from outside the Randstad region.

Respondents by property management (%)

Ownership 37

Lease 63

Respondents by management form (%)

19

31

Independent operator without franchise formula Independent operator with franchise formula Under management of domestic or international chain Part of a chain of own hotels

7

Together, the 282 hotels that participated account for 28,856 rooms.

The market for hotels with a star rating has a total capacity of approximately 95,000 rooms. Approximately 85,000 of these rooms are in the three-, fourand five-star market segment.

43

Our sample can be classified by management form and property management as shown below.

It is important to note that it is not our intention to draw conclusions regarding the entire population of accommodation-providing businesses.

Instead, we aim to provide guidance for interpreting trends in the hotel sector.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 5

1 Market indicators 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.

The adjoining table shows the segmentation of the key ratios by region, room size, star rating and price band.

1.1

Key ratios

In the current downturn caused by the recession, the hotel sector keeps hoping for a recovery in the market. In 2010, a small increase in the occupancy rate and the average room rate appeared to indicate that a recovery was on the horizon. While this trend seems to have continued in 2011, it has not had any positive impact on total revenue in the hotel sector.

The average occupancy rate for the Netherlands as a whole increased by 1.6% to 65.2%. Another positive development in 2011 was the increase of the average room rate by EUR 3 to EUR 90 (2010: EUR 87). Combined,

6 | 1 Market indicators

these two developments resulted in the RevPAR increasing by 8.0% in 2011 to EUR 59 compared to the previous year.

However, this increase in the occupancy rate did not occur in all the regions and all market segments. In fact, part of the hotel sector has been experiencing a decrease in occupancy rates that has continued unabated since the start of 2008. This mainly concerns the provinces of Overijssel and Zeeland, where the occupancy rate fell by 11.0% and 1.5% respectively. By contrast, in the Utrecht and Flevoland region, which recorded the biggest increase, the occupancy rate rose by 2.2% to 65.8%. In the province of North-Holland, the increase was smaller and came to 1.2%. However, the resulting average occupancy rate of 74.3% means that North-Holland continues to lead the Netherlands on this key ratio.

In 2010, we saw that three-star hotels in particular struggled, while four-star and five-star hotels benefited from a lower room rate. Remarkably, this trend now seems to have reversed. In 2011, three-star hotels saw their occupancy rate increase by 4.6% to 64.8%. In the Amsterdam and Schiphol region, three-star hotels recorded an even greater increase in their occupancy rate.

Here it increased by 16.2% to 78.1%.

By contrast, at four-star hotels the occupancy rate decreased by 0.5%

to 65.7%. Five star-hotels, however, also recorded an increase in their occupancy rate, which came to 63.1% in 2011 (2010: 62.3%). It appears that in 2011, due to the recession, guests preferred cheap hotels.

A remarkable development in 2011 was the decrease in total revenue per room, which on average fell by 14.4% to EUR 39,694. Three-star hotels recorded the steepest decrease. Here, total revenue per room decreased by 28.5% and came to EUR 28,935. In addition, total revenue in the four-star market segment also decreased, by 11.4%.

Despite an increase in demand and in the average room rate, rooms in this market segment generated less revenue in 2011. This may be explained by the fact that guests are making less use of the other facilities available at hotels such as restaurants and reception venues.

This is, in turn, is attributable to a decrease in the number of conferences, workshops, receptions and parties that are being organised. Five-star hotels, however, did manage to increase their total revenue by 6.2% to EUR 95,248.

In the five-star segment, it seems, guests are relatively unaffected by the crisis, or hoteliers are better able to r etain customer loyalty: guests continue to have meals at the hotel restaurant.

© 2012 KPMG Accountants N.V. All rights reserved.

Table 1.1.1: Market indicators Occupancy rate % Total

Average room rate (€)

RevPAR (€)

Total revenue per room (€)

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

65,2

63,6

62,5

90

87

90

59

55

56

39.694

46.374

44.332

59,3

59,8

62,1

78

73

85

46

43

53

39.870

42.815

41.651 41.873

Province Groningen, Friesland and Drenthe Overijssel

54,4

61,2

56,0

79

68

79

43

42

44

35.005

48.785

Gelderland

60,7

60,1

59,2

70

73

78

43

44

46

44.530

49.477

47.663

Utrecht and Flevoland

64,3

63,6

63,0

78

76

88

50

48

55

39.822

66.825

46.646

Noord-Holland

74,2

73,1

66,9

115

114

105

86

83

70

45.316

50.990

46.618

Zuid-Holland

63,9

61,6

60,2

87

91

93

56

56

56

46.702

46.482

40.880

Zeeland

63,1

64,1

67,6

81

83

82

51

53

55

25.329

26.159

31.087

Noord-Brabant

62,2

60,1

60,4

77

78

78

48

47

47

29.684

32.610

39.892

Limburg

60,9

59,9

59,5

79

88

87

48

53

52

31.589

45.220

48.228

Size < 50 rooms

62,9

61,2

63,7

83

87

86

52

55

55

42.957

43.002

43.188

50 - 100 rooms

64,7

65,5

60,7

85

83

90

55

55

55

38.221

51.341

46.242

101 - 150 rooms

64,8

63,2

63,0

92

86

82

60

55

52

36.879

43.302

42.933

> 150 rooms

70,9

65,6

63,3

110

103

103

78

67

65

41.646

44.466

43.926

Location Amsterdam + Schiphol

77,7

73,1

70,9

127

123

122

99

90

86

50.549

56.815

49.980

Other

61,9

61,5

60,8

80

79

84

49

49

51

36.152

43.993

43.101

Star rating Three stars

64,8

60,2

61,8

76

67

78

49

40

48

28.935

40.441

35.019

Four stars

65,7

66,2

63,0

88

91

87

58

61

55

39.033

44.057

43.854

Five stars

63,1

62,3

58,6

216

189

201

136

117

118

95.248

89.649

85.034

Price band < € 65

61,5

61,7

60,3

54

54

57

33

34

34

27.419

39.416

31.668

€ 65 - € 80

62,8

60,5

62,0

72

72

74

45

43

46

29.989

36.802

38.322

€ 81 - € 105

66,3

67,0

63,5

93

92

92

61

62

58

39.047

47.004

45.203

> € 105

71,3

64,8

63,7

149

157

145

106

102

92

61.688

68.392

62.279

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 7

Table 1.1.2: Occupancy rate Occupancy rate (%)

Total

2011

2010

2009

Three stars

Four stars

Five stars

Total

Three stars

Four stars

Five stars

Total

Three stars

Four stars

Five stars

Total

64,8

65,7

63,1

65,2

60,2

66,2

62,3

63,6

61,8

63,0

58,6

62,5

Location Amsterdam + Schiphol

80,5

78,3

67,7

77,7

61,9

77,5

71,2

73,1

81,5

70,0

65,0

70,9

Other

60,8

62,7

55,6

61,9

60,0

63,2

55,0

61,5

59,5

61,8

47,4

60,8

Three stars

Four stars

Five stars

Total

Three stars

Four stars

Five stars

Total

Three stars

Four stars

Five stars

Total

76

88

216

90

67

91

189

87

78

87

201

90

Amsterdam + Schiphol

96

110

274

127

71

113

238

123

93

100

218

122

Other

71

83

122

80

67

85

148

79

76

85

170

84

Table 1.1.3: Average roomrate Average roomrate (€)

Total

2011

2010

2009

Location

Tables 1.1.2 and 1.1.3 provide a detailed overview of the occupancy rate and the average room rate in 2009, 2010 and 2011.

The most remarkable increase shown in these tables is the increase in the occupancy rate in the three-star market segment in the Amsterdam and Schiphol region, where it rose by no less than 16.2% to 78.1%. In addition, the average room rate in this market segment increased by EUR 21 to EUR 92. This suggests that increasing price awareness has led to more demand for three-star accommodation.

Four-star hotels in the Amsterdam and Schiphol region also recorded an increase in their occupancy rate, which

8 | 1 Market indicators

rose by 0.8% to 78.3%. Their average room rate, however, decreased by EUR 3. Among five-star hotels in this region, the occupancy rate fell by 3.5% and came to 67.7%, but the average room rate increased by EUR 36.

In the rest of the Netherlands, occupancy rates levelled off, with three- and fivestar hotels recording a fractional increase. A decrease in the occupancy rate was recorded only in the four-star segment, where it fell by 0.5% to 62.7%. In this segment, there was also a marginal decrease in the average room rate by EUR 2. By contrast, the average room rate in the three-star segment increased by EUR 4 to EUR 71. In 2011, as in 2010, there was again a major

decrease in the average room rate at five-star hotels, which fell by EUR 26 to EUR 122.

As in 2010, the biggest increases in room and occupancy rates were recorded in the Randstad region. This is usually the first region to show signs of recovery. Despite these more positive figures, total revenue per room continues to fall. Although there has been an increase in the number of rooms booked, less revenue is being generated per room. It appears that guests are cutting down on restaurant and other expenditure, which means that hotels are still in a weak financial position despite increasing demand.

© 2012 KPMG Accountants N.V. All rights reserved.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 9

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 accompanying table provides insight into market segmentation in 2011, 2010 and 2009.

Optimising revenues requires insight into the various distribution channels.

To this end, on pages 12 and 13 we provide an overview of market segmentation, showing the following distribution channels: • Walk-ins • Direct contact (email and telephone) • Own website • Own reservation system • Online third- party booking agents • Tour operators/travel agents • Auction websites Last year, we expanded our study to include auction websites. On pages 12 and 13 we also include a table showing guests’ area of origin.

10 | 1 Market indicators

© 2012 KPMG Accountants N.V. All rights reserved.

Table 1.2.1: Market segmentation Business individual Total

Business group

Leisure individual

Leisure group

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

35

35

34

16

17

16

39

38

42

10

11

8

32

45

39

17

8

11

45

38

46

6

9

4 20

Province Groningen, Friesland and Drenthe Overijssel

21

19

26

14

8

10

46

41

44

19

32

Gelderland

28

27

29

26

22

23

37

41

40

9

11

8

Utrecht and Flevoland

47

49

43

17

25

23

25

17

29

11

9

6

Noord-Holland

31

29

28

14

18

16

44

41

48

11

12

7

Zuid-Holland

41

39

45

21

23

20

28

31

29

10

7

7 14

Zeeland

22

18

13

9

12

15

63

64

58

6

7

Noord-Brabant

55

57

55

11

14

13

26

22

28

8

8

5

Limburg

27

23

31

13

12

10

48

52

50

12

13

9 13

Star rating Three stars

37

38

31

13

14

14

38

36

42

12

12

Four stars

34

32

35

17

19

17

39

39

42

10

10

6

Five stars

30

31

30

27

19

18

36

43

42

7

8

10

Area of origin Table 1.2.2. provides insight into guests’ area of origin. Overall, there have been no major changes in the areas from which guests originate. The most noteworthy shift concerns the increase in the share of guests from Eastern Europe, which came to 5.2%, a continuation of the strong increase observed last year. While Dutch and other Western-European guests are increasingly opting for the cheaper market segment, guests from Eastern Europe and from outside Europe can increasingly be found in the five-star market segment. Guests from the US in particular account for a large share of

the stays at five-star hotels. In addition, In the five-star segment there has been a major increase in the number of business stays.

Market segmentation by distribution channels In 2011, we witnessed a further decrease in the share of bookings through traditional distribution channels (direct contact and tour operators). Their market share was picked up mainly by online third-party booking agents and auction websites.

This shift is mainly occurring in the cheaper market segment and outside of the Randstad region. In the five-star

© 2012 KPMG Accountants N.V. All rights reserved.

market segment and the Randstad region, we see an opposite trend.

Here, the share of walk-ins and direct contact increased. Nonetheless, online third-party booking agents and auction sites strengthened their position in the hotel market, increasing their market share from 26.4% in 2010 to 29.3% in 2011. In addition to increasing their market share, these third-party websites are also charging higher fees. At present, hotels are spending 15 to 20% of their room revenue on payments to these third parties.

Hospitality Benchmark 2012 | 11

Table 1.2.2: Market segmentation by area of origin Area of origin Total

Nederland

Western Europe (including UK)

Eastern Europe (including Russia)

Asia

United States

Africa / Middle East

Canada / Australia

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

56,2

57,8

57,0

26,2

26,3

28,1

5,2

4,2

3,8

4,3

3,2

3,2

5,2

5,6

4,8

1,5

1,4

1,6

1,4

1,5

1,5

Province Groningen, Friesland and Drenthe

74,4

76,3

79,7

17,9

18,8

12,8

2,4

1,8

1,6

1,5

0,9

1,5

2,0

1,7

3,0

0,9

0,2

0,5

0,9

0,3

0,9

Overijssel

69,3

84,6

80,8

20,8

11,2

13,5

4,4

1,6

2,8

3,3

0,8

0,8

1,1

1,4

1,4

0,8

0,2

0,3

0,3

0,2

0,4

Gelderland

76,5

74,9

73,9

12,2

15,5

17,4

3,7

2,5

1,6

4,0

2,5

1,6

2,5

2,6

2,4

0,6

1,2

2,6

0,5

0,8

0,5

Utrecht and Flevoland

63,6

59,1

55,7

16,8

24,6

28,1

11,4

3,3

4,0

3,8

5,1

4,4

2,8

3,9

4,0

1,2

2,9

2,2

0,4

1,1

1,6

Noord-Holland

31,0

28,5

36,6

38,1

39,6

38,5

6,6

7,3

5,6

7,2

5,6

6,0

11,7

12,9

8,4

2,6

2,3

2,4

2,8

3,8

2,5

Zuid-Holland

55,8

55,3

47,8

26,4

27,0

33,7

5,9

3,7

4,2

4,4

4,4

3,3

3,9

6,7

6,6

1,9

1,7

1,8

1,7

1,2

2,6

Zeeland

52,0

48,2

55,3

45,0

41,0

41,6

0,7

6,1

1,9

0,7

0,8

0,2

0,9

2,4

0,7

0,5

1,2

0,1

0,2

0,3

0,2

Noord-Brabant

55,0

57,3

60,6

25,1

26,4

26,4

6,9

4,3

4,2

5,1

3,1

3,0

5,0

5,5

3,8

1,6

1,6

1,3

1,3

1,8

0,7

Limburg

70,8

72,2

70,8

20,5

18,9

19,8

2,6

3,4

3,6

2,0

1,8

1,5

2,6

2,8

2,7

0,8

0,5

0,7

0,7

0,4

0,9

Three stars

54,5

60,5

58,8

27,6

26,8

28,2

5,6

4,7

4,2

5,0

2,4

2,4

4,2

3,4

3,0

1,4

1,2

1,9

1,8

1,0

1,5

Four stars

58,8

57,4

57,4

25,2

25,4

27,8

4,9

3,8

3,6

3,7

3,5

3,4

4,9

6,6

4,9

1,4

1,6

1,5

1,1

1,7

1,4

Five stars

40,5

45,8

39,6

28,5

30,5

32,2

5,1

4,4

3,9

6,0

5,6

5,2

16,2

10,8

14,3

2,2

1,2

2,1

1,5

2,0

2,7

Amsterdam + Schiphol

26,6

26,7

25,0

37,5

38,7

43,6

7,5

7,4

6,9

8,2

6,2

8,1

13,9

14,8

10,9

2,8

2,0

2,7

3,5

4,2

2,8

Other

63,6

64,4

66,4

23,4

23,6

24,7

4,6

3,5

3,1

3,3

2,6

2,2

3,1

3,7

3,4

1,1

1,3

1,4

0,9

0,9

1,2

Star rating

Location

Table 1.2.3: Market segmentation by distribution channel Distribution channel

Walk-ins

Direct contact

Own website

Own reservation system

Online third-party

Tour operator / travel agent

Auction sites

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

4,9

4,2

4,7

34,3

37,6

46,2

15,0

15,4

13,4

9,3

9,0

7,3

26,4

23,9

20,4

7,2

7,4

8,0

2,9

2,5

Groningen, Friesland and Drenthe

3,6

4,8

4,5

44,4

43,6

53,4

15,7

11,8

12,3

11,5

10,2

9,5

17,4

24,5

14,8

3,6

3,9

5,5

3,8

1,2

Overijssel

3,1

4,6

4,8

39,2

62,8

50,5

21,6

7,8

6,5

7,6

3,0

5,9

18,3

13,8

21,3

5,5

3,6

11,0

4,7

4,4

Gelderland

2,7

2,7

4,0

36,5

42,0

53,1

20,8

18,1

13,9

8,3

9,2

8,1

22,3

20,5

14,8

4,8

5,4

6,1

4,6

2,1

Utrecht and Flevoland

2,7

3,0

3,8

44,7

31,6

43,1

18,5

25,3

17,2

6,1

21,1

9,8

20,2

15,7

20,3

5,3

2,6

5,8

2,5

0,7

Noord-Holland

7,0

4,3

5,0

25,8

21,7

41,6

13,8

15,9

10,4

10,7

8,8

7,4

31,1

30,5

25,7

9,9

15,8

9,9

1,7

3,0

Zuid-Holland

4,1

3,8

3,9

34,9

39,7

50,9

11,2

12,8

9,9

8,5

12,1

7,4

29,0

22,8

19,1

7,5

7,3

8,8

4,8

1,5

Zeeland

2,5

6,8

7,9

32,4

38,2

39,8

22,9

13,0

16,5

1,8

4,7

7,7

27,1

29,2

23,3

11,4

6,1

4,8

1,9

2,0

Noord-Brabant

4,4

3,7

4,5

35,7

47,9

62,1

12,1

16,0

10,8

12,6

8,2

4,6

27,5

19,5

10,0

5,9

3,2

8,0

1,8

1,5

Limburg

6,6

5,2

4,4

35,6

34,6

31,6

11,7

16,2

27,6

8,7

4,5

4,9

28,7

26,9

24,4

6,7

7,5

7,1

2,0

5,0

Three stars

5,1

5,0

6,1

33,1

40,4

41,2

14,8

14,6

15,9

6,4

7,9

6,3

28,9

22,5

23,5

8,7

5,5

7,0

3,0

4,1

Four stars

4,3

3,8

4,1

34,2

36,0

48,9

15,4

16,1

12,0

11,7

10,1

7,7

25,1

24,7

19,1

6,2

8,0

8,2

3,1

1,3

Five stars

10,3

1,9

3,7

39,6

34,9

43,9

12,7

15,5

16,2

5,7

7,5

7,4

23,5

26,1

18,7

7,9

13,7

10,1

0,3

0,4

Total

2009

Province

Star rating

12 | 1 Market indicators

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© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 13

Table 1.3.1: Personnel analysis by number of rooms Number of rooms Total

< 50

51-100

101-150

> 150

Total

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

Administrative & General (including HR)

1,9

1,7

1,9

2,9

2,4

2,4

2,7

3,0

2,7

5,0

7,3

5,8

2,8

3,1

2,9

Rooms

4,9

4,2

4,5

9,6

8,6

9,8

12,0

13,8

13,9

29,8

31,2

31,0

9,9

10,1

12,4

F&B

8,5

7,4

7,1

15,9

16,2

17,3

17,4

25,1

26,7

30,7

33,6

38,2

14,8

15,5

18,9

Sales & Marketing

0,9

0,6

0,4

1,4

1,5

1,3

2,2

1,9

1,6

8,1

3,1

3,1

2,0

1,9

1,4

Property management & Maintenance

0,7

0,5

0,4

1,2

1,1

1,3

1,9

1,8

2,1

4,4

5,8

3,9

1,5

1,5

1,6

Department

Other departments

1,6

1,4

0,8

2,3

2,0

2,8

4,2

2,1

2,2

7,4

1,8

1,9

3,0

2,4

1,9

Totaal

18,5

16,2

15,1

33,3

31,8

34,9

40,4

47,7

49,2

85,4

82,8

83,9

34,0

34,4

39,1

Table 1.3.2: Personnel analysis by star rating Number of stars Total

Three stars 2011

2010

Four stars 2009

2011

2010

Five stars 2009

2011

2010

Total 2009

2011

2010

2009

Department Administrative & General (incl. HR)

1,6

1,9

2,1

3,1

3,4

2,9

4,8

7,7

7,8

2,8

3,1

2,9

Rooms

4,2

5,3

4,8

11,5

12,3

13,8

24,6

21,2

39,1

9,9

10,1

12,4 18,9

F&B

7,5

10,4

7,4

16,5

20,2

20,9

34,2

55,1

59,7

14,8

15,5

Sales & Marketing

0,7

0,7

0,5

2,2

2,3

1,4

6,2

5,4

7,2

2,0

1,9

1,4

Property management & Maintenance

0,6

0,8

0,7

1,5

1,7

1,8

4,5

3,5

4,2

1,5

1,5

1,6

Other departments

1,5

1,8

0,7

3,3

2,7

2,4

7,0

3,2

1,4

3,0

2,4

1,9

Total

16,1

21,0

16,2

38,1

42,6

43,2

81,3

96,1

119,4

34,0

34,4

39,1

1.3

Personnel

Personnel analysis by number of rooms A large share of the revenue of hotels (on average about 30%) is spent on personnel costs. To improve a hotel’s result, it is therefore important to keep this cost item under control, though not at the expense of the staff.

This section focuses on personnel and includes various personnel analyses,

© 2012 KPMG Accountants N.V. All rights reserved.

which are segmented by number of rooms and star rating.

Overall, the number of FTEs continued to decrease, a trend we have been witnessing since 2008. At small hotels (<100 rooms), however, there was an increase in the number of FTEs. This increase (0.7% for <50 rooms and 1.0% for 51-100 rooms) was mainly accounted for by room staff. It is attributable to a small increase in the

© 2012 KPMG Accountants N.V. All rights reserved.

occupancy rate. In addition, 44% of the respondents indicated that they were maintaining a strong focus on sales to avoid liquidity problems. This explains the increase in the number of sales staff.

Personnel analysis by star rating The decrease in staffing levels was especially noticeable at four- and fivestar hotels. In the four- and five-star segments, there was a major decrease

Hospitality Benchmark 2012 | 15

Table 1.3.3: Average payroll costs per FTE (full-time equivalent) (in €)

Administrative & HR

Rooms

F&B

Sales & Marketing

Property management & Maintenance

Total

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

Total

62.480

61.430

58.114

39.281

45.085

41.369

35.672

37.050

34.377

41.847

37.614

34.008

39.238

36.325

39.702

43.392

42.184

38.068

Table 1.3.4: Revenue per FTE (full-time equivalent) (in €)

Total

Total revenue per employee

Total room revenue per room employee

Total revenue from F&B per F&B employee

Absenteeism Last year, we found a 35.4% decrease in absenteeism at the larger hotels (>150 rooms). This year, this decrease has stagnated. It should be noted, though, that there has been an overall decrease in absenteeism, which fell by 0.7% and came to 3.2%. It appears that hotels have improved their internal controls to prevent hidden absenteeism.

2011

2010

2009

2011

2010

2009

2011

2010

2009

116.058

112.941

114.053

187.256

178.539

170.207

93.003

87.101

88.243

Table 1.3.5: Absenteeism by number of rooms (in %)

Star rating Three stars

114.804

114.483

99.210

159.857

156.939

159.440

77.665

93.178

89.942

Four stars

116.351

112.634

119.845

190.583

188.313

175.193

95.131

82.006

87.938

Five stars

116.110

106.879

102.644

219.824

204.353

151.142

105.078

88.714

85.313

Total

Absenteeism 2011

2010

2009

3,2

3,9

4,0

Size

in the number of F&B staff (expressed in FTEs), these staffing levels falling by 18.3% and 37.9% respectively. This is directly attributable to the decrease in guests’ F&B expenditures. In addition, hoteliers are employing less permanent staff, using more flexible staff instead. This shift is especially noticeable for housekeeping, which is increasingly being outsourced. Among three-star hotels, on average 38% of the work was outsourced, for four-star hotels this percentage came to 50%, and among five-stars it was as high as 60%. 35% of the respondents indicated that if they were faced with liquidity problems this year, they would tackle this by further reducing their staffing levels, a rise of 20.6% compared to last year.

Another remarkable finding was that the total number of FTEs has remained

16 | 1 Market indicators

at the same level in the three-star segment. There has been a shift away from direct departments to support staff, which indicates an increase in back office services.

Overall, staffing levels are increasing mainly in sales & marketing, which demonstrates that during a recession it is important to focus on increasing sales revenue by investing in this department. This shift away from focusing only on cost savings and towards focusing more on increasing sales is an important and necessary development.

Average payroll costs per FTE In 2011, average payroll costs decreased for both room staff and F&B staff, by EUR 5,804 and EUR 1,378 respectively. The fact that guests are spending less on food and beverages

has apparently led to personnel cost savings in the area of F&B. In sales & marketing, there has been a remarkable increase in staffing levels.

This is probably due to 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. This is attributable in part to a decrease in the payroll costs of room and F&B staff and an 8.0% increase in RevPAR across the board.

In the three-star segment, there has been a remarkable but logical decrease in the revenue per FTE in F&B, which fell by more than EUR 15,000. This appears to be directly attributable to the drop in guests’ F&B expenditure.

© 2012 KPMG Accountants N.V. All rights reserved.

< 50 rooms

2,7

3,8

3,5

50 - 100 rooms

3,9

4,4

4,1

101 - 150 rooms

2,7

3,3

3,1

> 150 rooms

3,3

3,4

5,2

Table 1.3.6: Absenteeism by star rating (in %) Total

Absenteeism 2011

2010

2009

3,2

3,9

4,0

Star rating Three stars

3,2

3,5

4,1

Four tars

3,2

4,1

3,9

Five stars

3,5

3,9

4,4

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 17

2 Benchmark analysis 2.1 Benchmark analysis 2011/2010/2009 The second part of the KPMG Hospitality Benchmark report consists of the benchmark analysis. Here you will find four profit and loss accounts:

by region, by number of rooms, by star rating and by price band. With the aid of the benchmark, you can compare your results with the study results and determine how your organisation is developing in comparison to the market.

Table 2.1 Profit and loss account by region (in %)

Groningen, Friesland and Drenthe 2011

2010

2009

Overijssel 2011

2010

Gelderland 2009

2011

2010

Utrecht and Flevoland 2009

2011

2010

2009

Noord-Holland 2011

2010

Zuid-Holland

2009

2011

2010

Zeeland 2009

2011

2010

Noord-Brabant 2009

2011

2010

Limburg

2009

2011

2010

Total 2009

2011

2010

2009

Revenues Rooms

45

47

44

45

42

41

34

40

35

52

57

46

66

58

58

57

50

48

57

50

50

56

49

40

54

40

42

59

50

50

F&B

47

46

49

43

50

53

48

45

48

38

35

46

27

33

33

34

39

42

43

43

48

36

40

46

38

36

43

33

39

40

Halls

3

2

2

5

2

1

4

5

5

7

3

3

3

4

2

3

6

5

0

1

0

4

4

6

3

6

1

3

4

3

Other

5

5

5

7

6

5

14

10

12

3

5

5

4

5

7

6

5

5

0

6

2

4

7

8

5

18

14

5

7

7

Total revenue

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Cost of sales (excluding personnel costs) Rooms

5

4

6

7

6

7

5

5

4

4

8

6

9

9

6

6

6

6

8

6

7

7

7

3

11

6

9

8

7

6

F&B

13

12

15

9

12

14

14

13

14

10

13

13

9

9

10

10

12

14

13

13

15

11

14

14

11

9

17

10

11

12

Other

3

2

1

2

2

1

3

2

2

2

3

1

2

3

2

3

2

1

0

2

1

2

3

3

1

1

3

2

2

2

Total cost of sales

21

18

22

18

20

22

22

20

20

15

24

20

20

21

18

19

20

21

21

21

23

20

24

20

23

16

29

20

20

20

Personnel costs (including social security charges, etc.)

Rooms

14

6

12

10

11

11

11

10

12

14

9

12

12

10

13

12

11

11

14

12

12

13

9

10

12

7

11

12

10

12

F&B

19

5

15

17

16

17

18

15

19

13

14

15

11

10

14

13

15

15

16

18

17

14

16

18

14

1

14

13

13

15

Administrative & General & HR

4

1

4

4

4

4

4

4

5

5

3

4

3

5

4

4

4

4

5

7

4

4

4

4

4

3

4

4

4

4

Sales & Marketing

2

0

1

2

1

1

1

2

1

2

1

1

1

5

1

2

1

1

2

2

2

1

2

1

1

1

1

2

3

1

Property management & Maintenance

3

1

2

3

2

2

5

2

2

1

1

2

1

3

2

2

1

1

3

1

2

3

1

2

2

1

2

2

2

2

Total personnel costs

42

13

34

36

34

35

39

33

39

35

29

34

28

33

34

33

32

32

39

40

37

35

32

35

33

13

32

33

32

34

Unallocated operating costs Administrative & General

5

1

2

4

3

3

3

4

4

4

5

3

3

5

4

3

5

3

2

5

2

2

3

3

3

3

3

3

4

3

Sales & Marketing

2

3

2

2

3

2

2

0

4

2

4

3

2

5

4

2

4

3

2

4

3

2

3

2

2

3

2

2

4

3

Property management & Maintenance

5

7

4

6

6

5

4

8

8

6

6

7

3

7

6

6

9

5

7

8

6

4

6

7

3

5

5

4

7

6

Other

4

13

4

6

4

13

5

6

7

2

6

5

4

6

4

6

5

3

10

6

5

5

6

5

3

4

5

4

6

5

Total unallocated operating costs

16

24

12

18

16

23

14

18

23

14

21

18

12

23

18

17

23

14

21

23

16

13

18

17

11

15

15

13

21

17

Total costs

79

55

68

72

70

80

75

71

82

64

75

72

60

77

70

69

75

67

81

84

76

68

74

72

67

44

76

66

73

71

Revenue for allocation of overheads

21

45

32

28

30

20

25

29

18

36

25

28

40

23

30

31

25

33

19

16

24

32

26

28

33

56

24

34

27

29

18 | 2 Benchmark analysis

© 2012 KPMG Accountants N.V. All rights reserved.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 19

Table 2.2: Profit and loss account by number of rooms (in %)

Table 2.3: Profit and loss account by star rating

< 50 2011

2010

50 - 100 2009

2011

2010

101 - 150 2009

2011

2010

> 150 2009

2011

2010

Total 2009

2011

2010

(in %) 2009

Revenues

Three stars 2011

2010

Four stars 2009

2011

2010

Five stars 2009

2011

2010

Total 2009

2011

2010

2009

Revenues

Rooms

48

48

46

51

48

44

59

51

45

65

52

55

59

50

50

Rooms

69

47

51

59

51

47

49

51

54

59

50

50

F&B

44

41

46

40

40

42

32

40

47

27

35

36

33

39

40

F&B

25

46

42

34

36

42

37

42

36

33

39

40

Halls

4

3

3

3

3

3

4

3

3

3

5

4

3

4

3

Halls

3

4

3

2

5

3

8

3

3

3

4

3

Other

4

8

5

6

9

11

4

6

5

4

8

5

5

7

7

Other

3

3

4

5

8

8

6

4

7

5

7

7

Total revenue

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Total revenue

100

100

100

100

100

100

100

100

100

100

100

100

Cost of sales (excluding personnel costs)

Cost of sales (excluding personnel costs)

Rooms

8

6

6

7

6

5

7

7

6

8

7

6

8

7

6

Rooms

8

6

5

7

6

4

9

7

5

8

7

6

F&B

15

14

16

12

12

13

10

12

14

9

9

11

10

11

12

F&B

7

13

13

10

12

13

14

8

12

10

11

12

Other

3

2

2

2

3

2

1

2

2

2

2

2

2

2

2

Other

1

2

2

2

2

2

4

3

2

2

2

2

Total cost of sales

26

22

24

21

21

20

18

21

22

19

18

19

20

20

20

Total cost of sales

16

21

20

19

20

19

27

18

19

20

20

20

Personnel costs (including social security charges, etc.)

Personnel costs (including social security charges, etc.)

Rooms

14

11

11

12

10

13

14

10

11

12

11

12

12

10

12

Rooms

15

11

12

12

10

11

8

11

12

12

10

12

F&B

16

14

16

15

15

16

13

14

16

11

11

13

13

13

15

F&B

8

16

15

13

13

15

17

11

16

13

13

15

Administrative & General & Personnel costs

4

1

5

4

1

5

4

1

4

4

6

4

4

4

4

Administrative & General & Personnel costs

4

4

5

4

4

4

5

7

5

4

4

4

Sales & Marketing

2

2

1

1

1

1

2

1

1

1

3

1

2

3

1

Sales & Marketing

1

2

1

2

1

1

2

9

1

2

3

1

Property management & Maintenance

2

5

2

4

4

2

2

4

2

2

5

2

2

2

2

Property management & Maintenance

2

2

2

2

1

2

2

4

2

2

2

2

Total personnel costs

38

33

35

36

31

37

35

30

34

30

36

32

33

32

34

Total personnel costs

30

35

35

33

29

33

34

42

36

33

32

34

Unallocated operating costs

Unallocated operating costs

Administrative & General

3

3

4

4

5

4

4

3

3

2

6

3

3

4

3

Administrative & General

2

3

5

3

5

2

3

6

6

3

4

3

Sales & Marketing

2

3

4

2

3

4

2

4

2

2

5

3

2

4

3

Sales & Marketing

1

3

5

2

4

2

3

4

5

2

4

3

Property management & Maintenance

6

9

8

5

7

7

4

5

5

3

8

5

4

7

6

Property management & Maintenance

3

6

9

5

9

5

3

4

6

4

7

6

Other

5

4

10

4

6

7

4

5

4

5

7

3

4

6

5

Other

3

5

9

5

6

7

4

6

6

4

6

5

Total unallocated operating costs

16

19

26

15

21

22

14

17

14

12

26

14

13

21

17

Total unallocated operating costs

9

17

28

15

22

16

13

20

23

13

21

17

Total costs

80

74

85

72

73

79

67

68

70

61

80

65

66

73

71

Total costs

55

73

83

67

71

68

74

80

78

66

73

71

Income before fixed charges

20

26

15

28

27

21

33

32

30

39

20

35

34

27

29

Income before fixed charges

45

27

17

33

29

32

26

20

22

34

27

29

20 | 2 Benchmark analysis

© 2012 KPMG Accountants N.V. All rights reserved.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 21

Table 2.4: Profit and loss account by price band (in %)

< € 65 2011

2010

€ 65 - € 80 2009

2011

2010

€ 81 - € 105 2009

2011

2010

> € 105 2009

2011

2010

Total 2009

2011

2010

2009

Revenues Rooms

49

48

36

58

47

44

58

49

50

62

54

58

59

50

50

F&B

42

39

51

34

41

49

33

40

38

30

36

33

33

39

40

Halls

5

6

6

3

4

3

2

2

3

4

4

3

3

4

3

Other

4

7

7

5

8

4

7

9

9

4

6

6

5

7

7

Total revenue

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Cost of sales (excluding personnel costs) Rooms

7

7

5

7

6

7

7

7

5

8

7

7

8

7

6

F&B

12

12

15

10

12

15

10

13

11

10

8

11

10

11

12

Other

2

2

2

2

2

2

1

2

2

3

3

2

2

2

2

Total cost of sales

21

21

22

19

20

24

18

22

18

21

18

20

20

20

20

Personnel costs (including social security charges, etc.)

Rooms

15

10

11

14

9

13

13

10

12

11

11

12

12

10

12

F&B

15

14

19

13

12

16

13

15

14

12

12

14

13

13

15

Administrative & General & Personnel costs

4

3

4

5

3

4

4

4

3

4

5

5

4

4

4

Sales & Marketing

1

2

1

1

1

1

1

2

1

2

5

1

2

3

1

Property management & Maintenance

3

1

2

2

1

2

3

2

2

2

3

1

2

2

2

Total personnel costs

38

30

37

35

26

36

34

33

32

31

36

33

33

32

34

Unallocated operating costs Administrative & General

3

3

3

4

3

2

3

4

3

3

6

5

3

4

3

Sales & Marketing

2

2

3

2

3

2

2

4

3

2

5

4

2

4

3

Property management & Maintenance

5

4

7

4

6

5

4

9

6

3

7

5

4

7

6

Other

5

2

5

5

5

4

4

6

5

4

7

5

4

6

5

Total unallocated operating costs

15

11

18

15

17

13

13

23

17

12

25

19

13

21

17

Total costs

74

62

77

69

62

73

65

78

67

64

79

72

66

73

71

Income before fixed charges

26

38

23

31

38

27

35

22

33

36

21

28

34

27

29

22 | 2 Benchmark analysis

© 2012 KPMG Accountants N.V. All rights reserved.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 23

3 Outlook for 2012-2014 In this part of our report we discuss the outlook for 20122014. Each year, based on our knowledge of the market, we outline our vision of the future of the hotel sector.

Market development is an annually recurring topic and this year our outlook also covers sustainability and re-financing.

Market developments 2011 saw a slight increase in the average room rate as well as the occupancy rate for the Netherlands as a whole. Despite this positive development, total revenue per room decreased by 14%. This appears to be partly attributable to the drop in expenditure in hotel restaurants and bars. Another factor is the decreasing demand in the business segment for venues for conferences, corporate workshops and parties. In addition, 65% of the hoteliers in our survey indicated that their average room rate in the first quarter of 2012 was equal to or lower than their average room rate in the first quarter of 2011. In the second quarter of 2012, 57% of our respondents saw their occupancy rate level off or decrease compared to the first quarter of 2011. A substantial majority of our respondents (65%) indicated that they are going to take action to improve their cash position. In general, they are doing

24 | 3 Outlook for 2012-2014

© 2012 KPMG Accountants N.V. All rights reserved.

so by postponing investment and maintenance, by requiring guests to pay in advance, by stricter enforce­ ment of terms of payment, and by reducing their staffing level. With profit margins and liquidity under pressure, the hotel sector is experiencing difficult times.

As in previous years, the rise in the occupancy rate and the average room rate occurred largely in the Randstad region, particularly in Amsterdam.

Especially three-star hotels in the Randstad benefited from increased consumer price awareness.

We expect this trend to continue; consumers will increasingly choose accommodation without a star rating but with high-quality amenities.

Hotel accommodation in a unique location and/or building or offering unique services will also remain popular, as shown by the rising number of boutique hotels.

Hotels without this competitive advantage will run in to increasing difficulties. Postponing investment and maintenance in particular will trigger a downward spiral at many hotels. With customers demanding ever more value for money, hotels will have to adopt an anti-cyclical investment strategy to stay afloat.

Banks, however, are increasingly reluctant to provide the credit required to fund these investments.

They now set strict requirements in terms of the contribution of equity, the hotel’s profitability, and its location and branding. As a result, hotels are

© 2012 KPMG Accountants N.V. All rights reserved.

increasingly joining renowned hotel chains so that they can more easily meet bank requirements.

Beside the need to obtain such financing or refinancing, other factors will also be contributing to an increase in the market share of chain hotels. These include the need to invest in reservation systems, sales and marketing programmes, IT, and personnel development programmes. Furthermore, hotel chains may have lower purchasing costs due to joint purchasing, as well as lower overheads. Often the burden of having to pay fees to a hotel chain is offset by the strength of chain’s brand name, which allows for slightly higher room rates, and by the fact that high-quality hotel chains have a loyal international customer base, which can help raise the occupancy rate. We therefore expect that hotel chains will be expanding their market share at the expense of independently operating hotels in the coming years.

In an economic downturn, a good strategy for management teams is to focus 70% of their energy on increasing sales and their profit margin, and 30% on cutting costs because in the end, recovery depends on increasing sales. Moreover, it is much more positive and enjoyable to focus on increasing sales than an cutting costs. Often, however, the default reaction of management teams is focus 70% of their energy on cutting costs, and only 30% on increasing sales and the profit margin.

Hospitality Benchmark 2012 | 25

While some hotel chains do have the right focus on raising sales, unfortunately we often will still see that the main emphasis on cutting costs. We hope and expect that in the coming years hotel chains will focus even more on increasing their sales. This should result in a reinforcement of sales & marketing departments, in client satisfaction surveys, new products and services, new pricing strategies, and invest­ ments in product development.

No less than 65% of the surveyed hoteliers has plans to try to generate more bookings via their own website to avoid having to pay high commission rates to third parties. Studies have shown, however, that many hoteliers do not have the expertise and/or time to properly achieve this properly.

Consequently, in the coming years there will be increasing demand for specialists who can assist hoteliers in this process.

Due to the recession and the stricter requirements set by banks for refinancing, there will is very likely be a growth in sale-and-leaseback transactions in the coming years.

This converts into cash hidden reserves embodied in buildings, allows for the repayment of loans, and improves the solvency ratio by reducing the balance sheet total and raising equity. Even healthy hotels are increasingly adopting an ‘asset light’ strategy, which means that instead of having ‘bricks’ on their balance sheet, they rent or lease their

26 | 3 Outlook for 2012-2014

Hotel chains will increasingly focus on the IT data security, including the security of their guests’ data. Only 24% of the surveyed hoteliers indicated that they feel that it is necessary to investigate whether their IT data are adequately protected against hacking.

We expect this percentage to increase rapidly in the coming years, as any security leaks can lead to major reputational and other damage.

buildings. The funds freed up by the sale- and-leaseback transaction are often used for further expansion.

The drawback of sale-and-leaseback constructions, however, is that hotels are often tied for years to high lease instalments, unable to benefit from any value increases on their buildings.

Asked about IT, 67% of the hoteliers indicated that they feel that guests should be provided with internet access in all areas, 24/7 and free of charge. Having to pay for internet after having booked an expensive room is a common bugbear for hotel guests, especially as internet is often available for free at cheap fast food and coffee chains. We expect most hotels will be providing free internet access in the near future.

Sustainability

In line with the strong growth of social media, 52% of our respondents indi­ca­ted that one of their staff members has been made responsible for handling hotel publicity. We expect a rapid increase in this percentage in the coming years.

In recent years, hotels throughout the Netherlands have been making their operations more sustainable.

This change is driven by a number of important social developments.

Businesses and government agencies are increasingly selecting hotels with sustainable operations, and consumers are trying to adopt a more sustainable and healthy lifestyle. This trend allows hotels to gain a competitive advantage by positioning themselves as a sustain­ able businesses. But does this also improve their profitability? And is there a future in sustainable operations?

Although hoteliers recognise the growing importance of the internet, only 20% have a staff member who is responsible for helping guests with IT or internet problems. Nothing is more irritating for guests than being unable to connect to the internet or having other IT problems. We expect that more hoteliers will have cards placed in the rooms informing guests that they can call reception if they have IT problems.

In 2012, about 34% of the three-, fourand five-star hotels in the Netherlands had a sustainability label, and their number is increasing. 40% of the hoteliers in our survey found that guests and businesses are more reluctant to choose a hotel if it does not invest in sustainability. This statement appears to be supported by the average room and occupancy rates for different types of hotels. At four-star hotels with a sustainability label, the average room

© 2012 KPMG Accountants N.V. All rights reserved.

and occupancy rates are 13% and 3% higher respectively than at four-star hotels without such a label. In the fivestar segment, this rises to 21% for the average room rate and 10% for the occupancy rate. In the three-star segment these differences are smaller.

Here, the average room rate was over 9% and the occupancy rate over 8% higher than at sustainable hotels.

While other factors obviously also play a part, these findings nonetheless suggest that making your operations more sustainable is a profitable investment. This trend is expected to result in more sustainable hotels in the coming years. This raises the question whether in a few years’ time having a sustainability label will still give you a competitive advantage. KPMG foresees that sustainable operations will become the benchmark and that labels will become a less effective means of encouraging the growth of your hotel.

The trend towards corporate social responsibility will therefore become ever more important for the hotel industry. More and more people will be wondering what the actual social impact is of your business operations.

Not only major companies but also private individuals will stop booking with hotels that are not sustainable.

Hoteliers that understand the market have a different perspective on sustainability. If you try to run a hotel sustainably purely to draw in new guests, in the end your strategy will probably fail. Awareness is increasing that corporate social responsibility

should be a goal in itself, not a means to attract more guests. Corporate social responsibility need not be driven by society’s expectations; it can also be based on an internal need to act responsibly towards society.

Transparency plays an important part in this; stakeholders should be actively involved in defining the hotelier’s role in society. This is the way to build mutual trust and run a healthy business.

Our study shows that may hoteliers are worried about the disappointing sales trend. Attempts to attract guests by cutting rates have not contributed to a sustainable sales improvement, nor have they led to customer loyalty. It is evident that a different approach is needed. One of the solutions is to win the confidence of social stakeholders.

One way to do this is by demonstrating that you do not just have that CSR label on your front door to paper over the negative side effects of your business operations. Hoteliers who identify their corporate social responsibility and actively take this in hand can regain the confidence of their guests, enabling them to gain a unique position in the market.

low profitability in the hotel industry, and the stricter requirements set by banks, we do not expect this to improve any time soon. The stricter requirements set by banks for financing investments in hotels relate to the contribution of equity, the hotel’s profitability, and its location and branding. When times were still good, hotels often needed to contribute only 25% in equity to get financing, now this is usually around 40%. If a hotel has had poor results in recent years, this is a further impediment to obtaining refinancing.

There are now less banks in the market for hotel financing, particularly when it comes to hotels that are outside of the Randstad region and not part of a chain. In the case of smaller hotels, family or friends might provide more financing. For larger hotels, we see a greater interest from private equity investors, both in Netherlands and on the international stage.

Another aspect of sustainability is using organic, natural and preferably locally sourced products, and the number of hotels doing this is rapidly increasing.

Financing and refinancing Currently it is difficult to get financing or refinancing for investment in hotels. Given the recession, the often

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 27

Explanation of terms used Room revenue

Average room rate

Cost of sales

This category comprises the sales revenue from guest accommodation.

It does not include any sales revenue from the use of available services.

The average room rate is calculated by dividing the room revenue by the total number of rooms occupied during the year.

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.

F&B revenue

RevPAR

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.

The RevPAR (revenue per available room) is calculated by dividing the room revenue by the total number of rooms available during the year.

Unallocated operating costs This category includes other costs such as energy costs, maintenance expenditure, travel expenses and consultancy fees.

Total revenue per room Income before fixed charges

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.

28 | Explanation of terms used

© 2012 KPMG Accountants N.V. All rights reserved.

The total revenue per room is calculated by dividing the total revenue by the total number of rooms.

Personnel costs

This is calculated by deducting the cost of sales, personnel costs and unallocated operating costs from the total revenue.

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.

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 29

About KPMG Netherlands KPMG offers services in the field of audit, tax and advisory.

We work for a wide range of clients: major domestic and international companies, medium-sized enterprises, non-profit organisations and government institutions.

The complicated problems faced by our clients require a multidisciplinary approach.

Our professionals excel in their own specialist fields while, at the same time, working together to offer added value that enables our clients to flourish in their own environment. In doing so, we draw from a rich source of knowledge and experience gained worldwide at a broad range of organisations and markets.

The KPMG Travel, Leisure & Tourism sector group has a wealth of expertise with respect to hotels, conference centres, bungalow parks, travel agents, restaurant chains and catering companies, and understands not just the world of the figures, but also what goes on behind the figures. It is a multi-disciplinary team of professio­ nals with experience in the industry.

Many members of our sector group also have qualifications in hotel management.

Optimising the financial organisation We review your financial organisation with you. We identify the strengths and points for improvement, on the basis of which we draft an action plan. The aspects we assess include the quality of the reporting processes, management’s and staff members’ competencies, and efficiency (such as the integration of financial systems).

Below you will find specific examples of how the KPMG Travel, Leisure & Tourism sector group can be of service to you.

Audit of the financial statements You can engage KPMG to audit your financial statements, to perform review engagements and to compile your financial statements. Thanks to our knowledge of the hotel sector, we can act as a professional sparring partner.

Benchmark – quick scan KPMG compares your figures to the benchmark figures and analyses the differences. KPMG can offer you advice regarding the key differences identified in order to gain better insight into your hotel’s performance.

Internal control smart card How well do you know the processes within your company, and to what

30 | About KPMG Netherlands

extent is your staff aware of the internal controls within the processes? KPMG uses handy smartcards to help identify the processes and internal controls at your company.

Travel, Leisure & Tourism (TLT) sector group

Assessing websites KPMG has a staff member with a hotel management qualification and a degree in Information Management, who is specialised in online developments in the hotel industry and changes in the distribution network. We can help you improve your own website in order to generate more bookings via this channel. We also advise you on how use various booking sites more effectively.

Improving the budgeting and forecasting process Many companies see the planning-andcontrol cycle as a difficult task. KPMG supports the development of a process that is efficient, in line with your operating management, and allows you to define clear targets. Thanks to our multidisciplinary teams we can use IT solutions to facilitate this.

© 2012 KPMG Accountants N.V. All rights reserved.

Operating capital management Less operating capital means more room to invest in existing or new hotels.

KPMG reviews your operating processes from the perspective of cash flow, providing specific sugges­ tions on reducing the operating capital requirement. This could involve, for example, improving payment terms with suppliers, reducing stocks by improving the ordering process, etc.

Cost optimisation KPMG can offer you advice on reducing your costs in the short term and help you raise the cost awareness within your organisation. We prioritise savings opportunities and help you implement improvements.

Speeding up and improving reporting processes Companies are increasingly faced with situations where the quality requirements for figures conflict with transparency requirements.

This puts a lot of pressure on the reporting processes. KPMG carefully analyses the preparation of the reports. We identify bottlenecks and determine which information is absolutely essential.

Sustainability Climate change compels companies to think about the way in which they do business. In the long term, hotel chains need to develop strategies to manage their impact on the environment (their so-called ‘carbon footprint’). KPMG can help you calculate your carbon

footprint and provides insight into how it can be managed and reduced.

Fraud How effectively is your company protected against fraud? KPMG help you prevent fraud and draft a plan of action if fraud is discovered.

VAT/corporation tax/wage tax scan How well informed are your financial accounts department and HR department about tax legislation and regulations? Find out with the aid of our tax scans.

Feasibility studies What is the feasibility of your plan to open a new hotel, to invest in a SPA? KPMG can carry out a feasibility study for you.

Advice on acquisitions and disposals KPMG can help you analyse possible acquisition candidates with the aid of industry experts, who identify the risks and opportunities that may arise if you acquire property from a real estate investor or real estate portfolio.

KPMG can assist you in due diligence investigations; as soon as the parties are in contact, we assist our clients, both in their domestic market and abroad, to ensure a detailed quanti­ fication of the potential risks arising from a transaction.

KPMG offers advice on disposals; our broad range of advisory services includes assisting management during the disposal process, preparing vendor due diligence reports, and designing data rooms.

Expanding into new and emerging markets KPMG can help you identify and act on opportunities in new and emerging markets.

Financing KPMG provides advice on structuring financing; we structure property financing for both property-specific financing as well as portfolio and capital markets financing.

Assistance with mergers, acquisitions and disposals Are you looking for a buyer for your company because you have no business successor or would like to realise your economic interest, or due to other (external) developments? Or have you identified opportunities for expanding your company? KPMG can assist you by ensuring optimal management of the process, with minimal disruption to your daily operations and the best possible result.

Information security scan KPMG assists you in designing a practical security policy that is tailored to your organisation’s objectives and strategic priorities and enjoys internal support. Inadequate security aware­ ness and behaviour within your organisation may give rise to various risks, including the risk of fraud, unauthorised access, loss of personal or sensitive business information, and reputational damage. When performing our scan, we can use ethical hacking,

© 2012 KPMG Accountants N.V. All rights reserved.

Hospitality Benchmark 2012 | 31

which involves IT specialists investi­ gating whether your hotel’s IT systems and data are secure.

Business succession KPMG can support your business succession. Often, the Managing Director and Majority Shareholder [directeur-grootaandeelhouder (DGA)] will have only very limited experience with business succession and/or disposal processes. Given the complexity of the many aspects involved, the DGA needs professional support to assist with the entire process, which takes an average of three to so seven years. KPMG has the required business, legal and tax expertise to provide optimal support to the DGA during the entire process of selling the company or transferring it to a successor.

32 | About KPMG Netherlands

Financing requests KPMG supports companies who want to request financing. If for whatever reason your company needs financing, KPMG can provide support and assistance, helping you draw up a financing request.

Business plans KPMG actively assists hoteliers in preparing, redesigning or adjusting a business plan for their company.

We coordinate the process, act as a sounding board and provide support by utilising our KPMG tools.

The main KPMG tools are the business planning workbook, workshops and our VisionPlanner software package, which allows you to systematically draw up a business plan and the accompanying financial forecasts.

Selecting your IT packages KPMG assists you with the selection of the IT packages you require. We help you chose from a range of IT packages for your Enterprise Resource Planning, Human Resource Management, Customer Relationship Management, and Consolidation and Reporting.

Supporting IT implementations KPMG assists you in implementing IT packages, supporting the various components , such as tests, conversions and internal controls.

If your organisation wants to obtain assurance regarding the contents of an IT implementation and the progress made on it, we can provide quality assurance regarding the project management.

© 2012 KPMG Accountants N.V. All rights reserved.

Contacts KPMG Accountants N.V. Laan van Langerhuize 1 1186 DS Amstelveen Postbus 74555 1070 DC Amsterdam

Jos Sweers Travel, Leisure & Tourism T: +31 20 656 8081 E: sweers.jos@kpmg.nl Ilse de Graaff Travel, Leisure & Tourism T: +31 20 656 8774 E: degraaff.ilse@kpmg.nl

www.kpmg.nl

© 2012 KPMG Accountants N.V., ingeschreven bij het handelsregister in Nederland onder nummer 33263683, is een dochtermaatschappij van KPMG Europe LLP en lid van het KPMG-netwerk van zelfstandige ondernemingen die verbonden zijn aan KPMG International Cooperative (“KPMG International”), een Zwitserse entiteit.

Alle rechten voorbehouden. De naam KPMG, logo en ‘cutting through complexity’ zijn geregistreerde merken van KPMG International. © 2012 KPMG Accountants N.V. Alle rechten voorbehouden.

De in dit document vervatte informatie is van algemene aard en is niet toegespitst op de specifieke omstandigheden van een bepaalde persoon of entiteit. Wij streven ernaar juiste en tijdige informatie te verstrekken. Wij kunnen echter geen garantie geven dat dergelijke informatie op de datum waarop zij wordt ontvangen nog juist is of in de toekomst blijft. Daarom adviseren wij u op grond van deze informatie geen beslissingen te nemen behoudens op grond van advies van deskundigen na een grondig onderzoek van de desbetreffende situatie