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Europe, October 2010, growth continues

Although the rate has stabilized and the double-digit results of last month are being reached, the hotel industry in Europe remains dynamic with steady growth in occupancy rate AND average daily rates. With three strong areas achieving double-digit growth: Benelux, France and United Kingdom, Europe benefits from solid motors to make up for weaknesses in the South.

The positive turnaround of the hotel cycle is now a reality in most European countries that post exemplary and above all steady results for several months. All the hotel categories are continuing to improve their occupancy rates a bit, with an additional perk for the upscale categories, while the benchmark of 70% occupancy rate last October was surpassed. This symbolic ceiling is the sign of a strong return of Business clientele to hotels for individual travel, conventions, seminars and exhibitions. There is no longer any reason to continue the promotional discounts offered in 2009. Although Revenue managers are prudent in their price increase strategy, the trend is favorable with an increase by more than 3%, a fairly constant increase depending on the categories, because the perk felt by the 4* was not generalized for all countries, some of which are still catching up. The cumulated effects of the two positive indicators makes it possible to maintain a solid increase in the RevPAR, higher than 8%, and practically reach a 4% increase on 12 cumulated months, a figure prior to the financial crisis.Europe is not uniform with respect to the hotel recovery as may be seen last month in Austria (-8% change in the RevPAR) and Denmark (-3.8%) which are penalized by the relative weakness of their calendar of important international meetings. If the level of activity remains high, it is due to attractive prices. On the other hand, the main bastions of the chain hotel industry uphold the solid recovery trend: United Kingdom (+13%), France (+12%), Germany (+9%), and to a lesser extent, Belgium (+11.3%) and the Netherlands (+22.9%). Amsterdam was the host city of important international conventions last October, including Sibos, the financial services exhibition where spending is high. In these Western European countries, capitals are boosting the trend, whence the importance of being a gateway for international traffic. The two Central European nations that suffered the most in 2009 are catching up spectacularly: Hungary (+22.6%) and Czech Republic (+18%), sticking with the group in the lead in terms of occupancy, but with average daily rates lagging behind. The maneuvering margin is still available to make them improve. Southern Europe is still having difficulty getting out of its lethargy and overcapacity that led to a price war in 2009. The movement is in the right direction, but the increase in occupancy needs to be supported by prices that do not vary from one year to the next.

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