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Economic performance, Europe reassures - Keep calm & Invest in the UK [?]

After several years with many challenges for the Eurozone, the Member States are seeing their efforts rewarded by better than expected economic growth.

While last year's concerns over Brexit and the context of insecurity following terrorist attacks weighed partly on GDP growth, in 2017 it is expected to sign the strongest increase since the euro crisis and remain at similar levels in 2018. Resilient household consumption, a falling unemployment rate and investments in full recovery have enabled the Euro zone to post strong economic performances that benefit the European hotel industry overall.

It should be noted, however, that despite these good performances, wages increased only slightly due to low growth in productivity and a high level of underemployment that limits any increase in household consumption.

Focus United Kingdom 

In terms of tourism, the United Kingdom has long been a model pupil of the EU with a supply showing strong growth over the last 5 years, occupancy rates approaching 80% and average daily rates that are among the highest in Europe. While London shone with the diversity and breadth of its offer (almost 100,000 rooms in 2017), other urban areas specialized and gained in attractiveness.  Even after voting to withdraw from the EU in 2016, the destination became even more attractive to foreigners thanks to the depreciation of the pound and hotel performance was boosted. While prices rose only slightly that year (+1.4%), the following year saw a solid increase by 4.5%.

However, the outlook for the coming years is not as bright and economic difficulties are looming due to uncertainties surrounding the outcome of the Brexit negotiations. While its unemployment rate is expected to remain below 5% in 2018 according to the OECD, its GDP growth is expected to be lower than that of the EU and household consumption is expected to be lower as well. As chain supply showed strong growth in 2017, hotel occupancy will be the first to suffer. As hotel categories are at different stages of the price growth cycle, a successful investment in the UK will include a good understanding of the economy and high-end segments. 

Read the hotel forecasts for 2018 - 2019 in the United Kingdom by category 

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