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2015 in Europe: hotel KPIs continue to grow, driven by southern countries and CEECs

The positive trend observed at Europe's hotels in 2014 continued throughout last year, posting 4.8% growth in its Revenue per available room (RevPAR). Once again, countries in the south of the continent and Central Europe, thanks to a rebound in activity, sustained growth of annual results on the continent. Germany and the United Kingdom are also still following a positive trend, while France continues to stagnate.

Europe's hotel industry continues its positive trend with significant growth in 2015, a sign that the continent remains a stronghold for chain hotels despite growing tension due to security issues. Hotels on the continent saw their occupancy rates progress 1.1 points last year, together with a significant increase in average daily rates (+3.2%). The combination of these two factors allowed the Revenue per available room (RevPAR) at European properties to confirm the good results glimpsed in recent years with a 4.8% increase throughout the continent. Results are upward bound, with growth in the indicator at 3.8% in 2014.

The occupancy rate at European hotels was up to 69.7% last year. With a 5% increase in the number of international tourists compared to 2014 -for a total of 609 million arrivals - Europe fully benefited from the general improvement of tourism worldwide. Many structural factors (evolution of the cost of transportation - particularly airline- with the drop in the price of petrol, euro/dollar parity, improved household consumption and buying power of households in certain European countries...) should continue to support hotel activity in the years to come, according to MKG forecasts 2016-2017. Average daily rates at hotel chains are growing and are now more than 90 euros excluding taxes. The increase observed follows the economic recovery for some of the member countries of the European Union, particularly in Central Europe and the Iberian Peninsula.

While the RevPAR is up on all hotel segments compared to 2014, it is once again the upscale categories that drove hotel growth. These categories posted 6.4% growth in their RevPAR in 2015, with growth in average daily rates by 4.2%. Across the continent, the RevPAR is 126.40 euros excluding taxes on twelve months  of the year. The upscale and luxury segments thus confirm their role as the growth engine for Europe's hotel industry. With an average occupancy rate of 70%, hotels in the category have the wind behind them - the indicator shows a 1.5 point increase over 2014.

Annual results of hotel chains by category

Countries around the Mediterranean basin benefited from the summer that was marked by particularly warm temperatures that resulted in strong growth for the hotel industry. The RevPAR experienced double-digit growth in the south of the continent; growth in the indicator is by 11.6% in Italy, 12.5% in Spain, and 13.5% in Portugal. These destinations have also benefited from tourists that defected from their usual destinations on Mediterranean shores such as Tunisia, Egypt and Turkey where security has seriously compromised arrivals of foreign clientele. The occupancy rate grew by 3.4 points at hotels belonging to Spanish chains and by 3.7 points at Portuguese properties. With strong growth in average daily rates (4.6%), Greece also shows strong growth in its RevPAR over 2014 with 5.5% growth.

As for increase in occupancy, the record on the continent goes to destinations in Central Europe. Poland affirms its position in 2015 as the European leader in this area with 4.9 point growth in occupancy. And the Czech Republic and Hungary are  also keeping step with respective growth by 4.2 and 3.4 points. In both of these countries, good occupancy statistics at hotels go hand in hand with strong growth in average daily rate by 7.3% at Czech properties and by 8.9% at their Hungarian counterparts, a sign of renewed economic activity in the Visegrád countries. The later report some of the strongest growth rates in their RevPAR throughout the continent: growth in the indicator reached 9.9% in Poland and 14.3% in Hungary and the Czech Republic.

Annual results of hotel chains by country

While the trend is generally positive for most European hoteliers, several destinations stand out with results that are below average in 2015. British hotels remain full with an occupancy rate that remains high: 79.2%, the best performance in European last year. After strong increases in London in recent years, the secondary markets picked up the relay and drove growth in 2015, while the British capital slowed under the effects of important growth in the hotel supply and the repercussions of the terrorist attacks in Paris on its own security.

The occupancy rate reached 76% on Luxembourg's hotel market, where the RevPAR rose 17.1% thanks to an increase in average daily rates by 15.5%: resulting from the rotating Presidency of the Council of the European Union, properties in the Grand-Duchy show the strongest growth on the continent regarding these two indicators. With steady growth in the occupancy rate and prices, hotel operators in the Netherlands should also look back on 2015 fondly: the national RevPAR shows an 8.1% increase on the year.

In 2015, French properties once again lowered results for Europe's hotel industry. The sector struggled in a particularly difficult context that was marked by the terrorist attacks in January and November, and by the subsequent mistrust of some international clientele. The return to normal is slow and French hotels also suffered from the overall moroseness of the country's economy. France is the only European country where the occupancy rate is down across the year, albeit by 0.3 points. While average daily rates only progressed weakly (+0.5%), hotels in the country hardly benefited from the improvement on the continental. At just 0.1% across 2015, the increase in the country's RevPAR is the weakest on the continent. While the indicator was down in 2014 (-0.2%), this near-stagnation nonetheless offers a glimmer of hope. While Paris's hotels suffered following the terrorist attacks in the capital, results are nonetheless encouraging in some French regions.

While some uncertainty remains, the year 2016 is off to a good start for hotels on continent. Economic forecasts for the European Union anticipate new improvement in growth in the GDP of its member-states, together with a drop in unemployment throughout the continent. Moreover, European destinations are a sure value for international tourism, with an outlook that remains positive regarding security; moreover the cost of transport is at its lowest. Nonetheless, several questions remain: the political and security based tension, the evolution of the economic crisis in Russia and Brazil that resulted in a sharp loss of buying power for tourist from those countries, and the extent of the slump in the growth of Asian clientele at European hotels, while they became one of the primary engines for the increase in business (at major destinations) in recent years.

This article is an extract from the full Hotel Report 2015/2016 for Europe, to be published soon. Subscribe to be sure to read it!

Or deepen your understanding (details of supply and demand by region, towns & segments, complete supply including major cities, rankings of operators...) with the European Hospitality Report.

Also read:

  • December 2015: Major disparities in Europe, from one hotel market to the next
  • Further growth by 4.4% in tourism worldwide
  • 2015-2016: French hoteliers mark a balance within contrasting circumstances
  • International tourism continues growth in 2015
  • In 2015, 109 million Chinese traveled outside of the country

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