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February 2016: Europe's hotel industry accelerates growth

After slight improvement in the sector's indicators on the month of January, Europe posts stronger growth in its hotel performances in February. While several destinations, such as France, report an ongoing negative impact on tourism from the terrorist attacks in November, others benefit from clientele avoiding destinations in North Africa.

February was generally positive for Europe's hotel industry, which showed new growth by 3.1% in the Revenue per available room (RevPAR) at properties on the continent. The RevPAR thus reached 53.6 euros, driven by 0.6 points growth in the occupancy rate and by 2.1% growth in the average daily rate over the same period in 2015. As for the past several months, improved performances are stronger in the upscale (RevPAR +4.7%), the midscale (RevPAR +2.5%), the economy (RevPAR +0.8%) and budget which stagnates (RevPAR -0.1%) although this figure is also the result of its stronger presence in France, the only European market that is down.

Monthly results of hotel chains by country
February 2016

The wave of cancellations and reservation changes in relation to the attacks in the month of November could be felt once again in France which remains the only country on the continent to experience a drop in its hotel performances. While hotels in the provinces have improved their business since the beginning of the year, activity in the capital continues to experience a strong impact and lies at the origin of the 3.6% drop in its RevPAR for the country overall. Like several other major European cities, London also appears to have been affected by the current climate of insecurity, although the stagnation of the country’s RevPAR (+0.1%) may also be accounted for by the negative impact on the economic climate created by announcements related to the referendum concerning a potential Brexit, meaning the United Kingdom’s exit from Europe, scheduled for next June.

While growth in the RevPAR is widespread in other European countries, especially in the Netherlands (+10.2% of the RevPAR) and the Luxemburg (+10.9% in the RevPAR), it remains more prevalent in Southern European and PECO countries. This month Spain’s hotel industry thus beat records in terms of performances, with significant growth in its RevPAR by 28.7%. The number of tourists avoiding destinations in North Africa due to the overall insecurity and unrest in the region, particularly in the Canaries and Balearic Islands, combined with the seasonal increase in activity at ski resorts. The Czech Republic, meanwhile, continued along its growth trajectory with 13.1% growth in its RevPAR on the period.

Germany posted moderate growth in its RevPAR (+2.2%) mostly thanks to increases in occupancy (+1.2 points), while prices only rose moderately (+0.4%). In Italy, prices even fell (-1.4%), supporting a sharp increase in occupancy (+3 points) that allowed hotels to report growth in turnover.

Across Europe, the first months of 2016 brought an increase in the occupancy rate by 0.4 points and by 1.1% in the average daily rate, resulting in a 1.8% increase in the RevPAR with respect to the same period last year. This opens the way to forecasting a fairly nice year for Europe’s hotel industry, which should nonetheless overcome several challenges, particularly in terms of security to sustain its international arrivals.

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