Decline, stagnation for some or solid RevPAR gains for others, what are the outlook for activity in 2019-2020 for Germany, Belgium, Spain, France, Italy, the Netherlands, Portugal and the United Kingdom? Economic situation,hotel development or other cyclical factors combine to shape contrasting businesstrends depending on the markets. Overview of business forecasts developed by our partner MKG Consulting. Part One: Germany.
Germany: good resilience of the hotel market
While more than 76% of overnight stays are generated by the German domestic market, and its economy therefore remains the main driver of hotel activity, the number of international tourist arrivals has nevertheless increased sharply since 2009. German urban destinations are also very dynamic on the MICE market, which represented more than 10 million visitors per year for 38.9 million international arrivals in 2018.
As of 1 January 2019, the German hotel market had a record number of more than 860,000 rooms (source: European Hospitality Report - MKG Consulting), driven by the significant development of the branded properties in recent years. However, this significant growth in supply (+4.4% in 2019, with a 2.6% increase in the overall market), which is expected to continue in the short term, is also a factor limiting performance gains. It could even cause a reversal if demand growth were to slow too much or even contract.
But the key German markets are showing good resilience, despite a rather unfavourable economic situation since the beginning of 2019. Over the full year, it is in the midscale segment that the best growth in RevPAR is expected, due to a catch-up in this category, which over the past five years has grown less in terms of supply and demand (less new hotels, more exposure to secondary markets or second-choice sites in key markets). Economy and upscale segments should see their occupancy rates remain higher in 2019 and 2020, despite some convergence between categories.
Overall, 2019 is therefore shaping up to be a satisfactory year in view of the country's economic situation, which has had little impact on business tourism, as the destination remains highly receptive to events. Slight increases in occupancy rates and average prices should combine to boost the RevPAR of German hoteliers. 2020 is expected to be less dynamic in the evolution of the indicators, as the current economic slowdown gradually begins to impact hotel occupancy rates. Prices should also logically evolve in a more measured way.
As of 1 January 2019, Berlin had more than 45,000 chain hotel rooms, representing an annual increase of +5% in the number of rooms. This increase follows several years of more moderate growth, while over the past decade the number of chain rooms has almost doubled and hotel demand has followed. It is based on solid pillars, such as the dynamism of its office real estate market or its increasingly rich supply for leisure visitors, while remaining competitive in terms of hotel rates in relation to its economic weight.
After a +7.1% increase in RevPAR in the German capital in 2018, 2019 should also end on a positive note, with OR continuing to grow in an environment of prices on a slight growth trend. 2020, on the other hand, looks less promising...
METHODOLOGICAL NOTE HOTEL ACTIVITY FORECASTS BY MKG CONSULTING
The hotel activity forecast reports are based on macroeconomic (GDP, domestic consumption, unemployment) and hotel underpinnings (short and medium-term changes in the hotel market, chains, ranges, etc.) compared to historical data on occupancy rates, average price and RevPAR from the OlaKala_ destination database. The comparison allows the quantification of the influence of the various factors and enables modelling. Forecasts thus provide essential visibility on future hotel activity in Europe.
INFORMATION AVAILABLE IN THE FULL STUDY:
Countries: Evolutions and absolute values over the full year (2019 & 2020) of OR, ADR and RevPAR by category according to three scenarios: high, median and low hypothesis. Focus on cities: Evolutions and absolute values of OR, ADR and RevPAR for all ranges combined.
Germany, Focus Berlin; Belgium, Focus Brussels; Spain, Focus Madrid and Barcelona; France, focus on Paris, Île-de-France, PACA and Province; Italy, Focus Rome and Milan; Netherlands, Focus Amsterdam; Portugal, Focus Lisbon and Porto United Kingdom, Focus London; For other European destinations, please contact us.
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