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Analysis

Worldwide hotel industry: New growth in hotel results despite the Asian slowdown

The global hotel industry is pleased to observe a sixth consecutive year of growth following the economic and financial crisis of 2008-2009, with a new increase in the RevPAR, which had been stabilized. While the security risk unfortunately spread to certain European destinations after sustainably hitting the Middle East and North Africa, growth in tourist arrivals nonetheless leaves room for hope that hotel groups will see their activity continue along this positive trend.

The worldwide hotel industry has once again confirmed its dynamism and its resilient capacity, by recording a 3.3% increase in Revenue per available room (RevPAR) in 2015. While this result is lower than last year’s (+5.0%) it can be explained by strong growth in supply at several dynamic international tourism destinations. This new growth allows corporate hotel chains to beat new records in terms of turnover, with an impressive rebound by 8.2% that could be observed last year in terms of revenues. The total turnover of hotel groups could be estimated at 427 billion euros, versus 394.5 billion euros in 2014. For hotel chains the evolution of this turnover is more dependent than ever on higher categories: the upscale and luxury segments alone represent 59% of the global breakdown of the business turnover, while the midscale range remains a must with 27% of the revenue on the sector.



Despite the enlargement of the international hotel supply, growth in supply and the appearance of new accommodation modes, occupancy of chain hotel properties has increased again: the average occupancy rate is up 1 point compared to the previous year, to settle at 69.9%. The success of economy (+0.6 points) and budget (+0.3 points) properties was more limited, but it is nonetheless necessary to observe that these categories are certainly the first concerned by the diversification of the offer in curtain regions – on the unavoidable Chinese market in particular. Upscale addresses benefited the most from international tourism growth, with a 1.3 point increase in occupancy rate, versus 1 point for the midscale and luxury alike.



The change in average daily rate also benefited midscale (+2.5% over 2014) and upscale (+2.4%) properties, imitated in this positive dynamic by budget hotels: results for the latter doubled with rates up by 4%., versus just 1.2% in 2014. This growth surpasses that which could be observed in the luxury hotel segment which saw its prices grow by 1.6% in 2015, versus close to 3% last year. The economy segment remains the problem among hotel sectors, with a first indicator down: average daily rates in the category settled with a slight –-0.2%– regression. If we consider all hotel categories, the increase in price per night is 1.9%.



Unsurprisingly, the midscale and upscale categories have posted the best performances across the year 2015, with respective growth in the RevPAR by 4.1% and 4.2%. The international hotel industry is also doing well in the budget categories (+2.9%) and in the luxury segment (+3.0%). The expansion of the global hotel supply will have brought on a stabilisation of results at properties in the economy segment, which had progressed by 4% last year, and saw growth in the RevPAR slow by 0.8%, with respect to the previous year.



However, global hotel results do not present a uniform image from one region to the next, as the degree of maturity achieved by the different markets always appears heterogeneous. Continuing along the excellent dynamic observed last year, the Americas continued their recovery, always confirming themselves as an engine that is indispensable for international hotel groups. Instead, the results observed in the Asia-Pacific, where there is a negative downtrend, are a logical result of growth in the supply and a slump in the economy in the South East of the continent. This is particularly true for the vast Chinese market whose supply grew once again at a frenetic pace. At the same time, Gross National Product for the country experienced the weakest growth in the last 25 years, nonetheless achieving a 6.9% increase in 2015. Nonetheless, predictions suggest a more important slack off in growth of the Chinese GDP this year once again, a short-term factor that should nonetheless not dampen ambitions of Chinese hotel groups who are increasingly out to conquer.



In terms of growth, Europe succeeds in rising above the global average, despite a particularly difficult context following the attack in Paris in November, that were then unfortunately followed by the attacks in Brussels. While the occupancy rates and their growth are close to the global results (up +1.1 point), average daily rates increased simultaneously in a more significant manner, with a rebound of +3.2% versus just +1.4% in 2014. This new increase allowed European hoteliers to report a RevPAR up by 4.8%, for growth that remains higher than the previous year. The good health of the European hotel industry in 2015 is especially due to the rebound in performances in the CEECs and countries in the South of the continent.

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