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July 2017: a bright day for Europe's hotels

After a month of June marked by steady growth in European hotel performances, the beginning of the peak season is synonymous with overall dynamism for the industry. While Europe's leading summer tourist destinations post very positive results, the highest growth may be found in other countries: Hungary, Luxembourg and Belgium are this month's top performers.

In July, chain hotels performed well in Europe: the average RevPAR (Revenue per available room) in the EU grew by 5.7% from 2016. Arrivals are up –the occupancy rate grew by 2.1 points– and average daily rates are also on an uptrend (+2.8%).

All the segments are growing at about the same rate, except from the budget segment which records stable average daily rates (+0.6%) offset by solid growth in occupancy (+2.8 pts). All the ranges experienced solid RevPAR growth, ranging from +4.5% (budget) to +6.6% (midscale).

In detail, the growth motors behind summer tourism that drove European hotel performances last year continue to lift hotel performances. The award for highest RevPAR growth goes to Portugal (+15.5%) and Greece (+14.4%) which benefited from the influx of July holiday goers and increased their average daily rates. Spain, meanwhile, after recording double-digit monthly growth since April, "slowed" to +7.5% while anti mass-tourism protests took place from Mallorca to Barcelona.

France experienced the backlash of last year's hotel rates during the Euro 2016, as well as mediocre weather in coastal areas. Although Paris and the Île-de-France regained the growth track after two difficult summers, average daily rates fell 3.1% throughout the country, leading to more moderate growth than elsewhere (RevPAR +1.9%). Nonetheless, perspectives for August should make it possible to improve these results (also read: First assessment of summer 2017).

In Italy, July was synonymous with heat waves and forest fires (that ravaged the ravaged the vegetation on Vesuvius, which didn't prevent Naples and the Amalfi coast to assert themselves as popular destinations). The Peninsula does not rank among the areas with the strongest tourism growth in July but delivered a solid +6.2% growth in the RevPAR. The same observation may be made in Germany (+6.7%) where the G20 summit was organized in Hamburg at the beginning  of the month and where Bavarian cities also posted high performances.

The winners on the period have stood out since the beginning of the year. Hungary posts its strongest monthly RevPAR growth (+28.8%) since the beginning of 2016. Its average daily rates skyrocketed, particularly thanks to the World Swimming Championships 2017 held in Budapest. Luxembourg (+21.5%) and Belgium (+17,7%) complete the podium, with the best growth in occupancy (+8.9 points) on the continent, mostly due to the improved security context with respect to last year. After major drops at the beginning of the year, ADRs regained a positive trend in Belgium: +3.4% in July.

The Netherlands also posted double-digit RevPAR growth in July (+13%), in keeping with an excellent beginning of the year. In the United Kingdom, the RevPAR grew by 5.3% thanks to higher rates (+4.9%), while occupancy rates stabilize at a high level (86% in July 2017, +0.3 point). In Europe, Poland is the only country that recorded a slight drop in RevPAR in July 2017 (-1.3%). This is tied to rate cuts, whereas occupancy is up.

Overall, European hoteliers recorded good performances in July: most countries saw their RevPAR grow in comparison to 2016, and some even boast double digit growth. The Benelux region, France and Italy, which struggled last year, are back on a growth track, while countries that have been top performers in recent months –incl. Spain, Portugal, Greece– continue to progress.

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