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December 2019: European hoteliers in slow motion

Is it the cold that paralysed tourists by preventing them from moving around or getting to the old continent? Or did they simply prefer to stay at home celebrating this holiday season with their families? Who knows? Only one thing is certain: European hoteliers ran at a slower pace this month.

The occupancy rate (OR) was stable (+0.0 point) at 62.7% overall, and the average daily rate (ADR) keeps rising up at a steady rate (+1.8%) to €94.00 excluding VAT. Revenue per available room (RevPAR) continues its slow ascent, up +2.7% (€59.00 excl. VAT).

As in Novemberit is once again the Top and the Bottom of the hotel supply that reveal the best RevPAR growth: +4.2% (€89.20 excl. VAT) for Upscale and +3.9% (€28.70 excl. VAT) for Budget. The Economy (+0.6%) as well as the Midscale (+1.3%) segment show neutral growth in their revenue per available room, which is respectively €44.20 excl. VAT and €54.90 excl. VAT.

RevPAR is driven upwards by ADR growth in Upscale (+2.8%) and Budget (+2.4%). Daily rates are stable in Midscale (+0.7%) and Economy (+0.4%). Also, no segment is gaining market share: +0.8 percentage points (OR 58.4%) for Budget, +0.2 pts (63.0%) for Economy, +0.4 pts (62.7%) for Midscale and +0.9 pts (64.4%) for the Upscale.

Across the the year (Year To Date - YTD results), only the Budget segment pushes its RevPAR up (+3.4%) to reach €34.40 excl. VAT. Actually, it changes at almost the same rate as the others: the Upscale (+2.4%), the Eco (+2.3%) and the Midscale (+2.1%). The same is also true for occupancy, which did not exceed growth by +1 pt in any segment. The annual trend is therefore towards stable performance for the European supply overall.

Only a few destinations show real growth. Two destinations have a positive double-digit RevPAR trend: Hungary (+18.5%) , which had the best growth for the second consecutive month since November, and Portugal (+15.7%). These results are thanks both to an increase in OR, up +5.5 points (72.3%) for Hungary and +5.0 pts (60.4%) for Portugal, but also ADR which grew by +9.6% and +6.2% respectively.

The Hungarian capital (Budapest) is largely responsible for the country's growth since the destination manages to gain +6.4 percentage points, demonstrating very good occupancy (OR 75.6%). Hoteliers took advantage of this trend to raise their ADR (+10.1%) leading to a strong surge in RevPAR (+20.2%).

In Portugal, all destinations experienced double-digit RevPAR growth: Lisbon (+17.9%), Porto (+12.7%), the Algarve region (+12.7%), the Norte region (+15.5%) and Lisbon and Tagus Valley (+17.0%).

Belgium follows, with RevPAR up +9.3%. The capital, Brussels, is pulling the results upwards with an increasing RevPAR (+13.4%), thanks to growth in both ADR (+7.1% to €117.90 excl. VAT) and in OR (+4.1 pts to 73.7%). Liège has also been very successful, with an increase of OR by +6.6 points (80.3%), resulting in RevPAR up by +10.7%.

Spain also posted a fine increase (RevPAR +9.0%), thanks to Madrid (+22.6%) - ADR up +17.3% - and Zaragoza (+10.4%) - ADR up +8.7%.

The Czech Republic also performed very well, with revenue per available room up +8.8%, thanks to an increase in ADR (+7.1%). Prague shows results similar to national results: a RevPAR up +3.9% and an ADR up +5.1%.

Luxembourg (RevPAR +7.3%) shows the 3rd best evolution in ADR (+7.1%), while the destination already has the best ADR this month (€127.80 excl. VAT), and the best ADR growth for the whole year (+5.7% to reach €139.80 excl. VAT).

Italy (RevPAR +6.3%) is driven by Florence (+16.1%) and Rome (+10.4%). National occupancy is nevertheless stable (+1.5 pt) so that growth is mainly the result of an increase in ADR (+3.6%).

Austria (RevPAR +5.2%) is the star of the year. Although the occupancy rate at the destination was up by only +0.6 pts in December (OR 82.3%), over the last twelve months, the average increase in OR was +2.2 points, bringing it up to 79.5% (second best OR in 2019 after the UK). The ADR increase is even more significant in December (+4.5%) or over the whole year combined (+4.6%). The destination breaks the record for RevPAR growth in 2019: +7.6% to €81 excl. tax per available room.

Four markets post stable RevPAR growth: Germany (+0.9%), the Netherlands (+0.2%), the United Kingdom (+0.0%) - which managed to maintain its ADR (+1.0%) despite a drop in occupancy (-0.7 pts), again due to the instability caused by Brexit, and France (+2.3%), which had a neutral evolution despite the strikes.

Finally, three markets are down. Greece lost -0.7% in revenue per available room, mainly due to a slight drop in ADR (-1.4%), whereas over the whole year (YTD) ADR is up (+0.9%). On the other hand, the Mediterranean destination is selling more rooms compared to the same period last year (+0.4 pts), but only half of them are occupied (OR 54.2%), showing rather slow activity, well below the annual average (OR 71.0%).

Poland also lost market share in December (-0.5 pts, OR 59.0%) resulting in a decrease in RevPAR (-1.7%). Most of its cities are experiencing the same negative dynamic: Krakow (RevPAR -6.9%), Poznan (-1.4%), and Warsaw (-0.7%). Only Gdansk (+2.9%) and especially Szczecin (+8.2%), a small city in the north west of the country, improved their performance, while Wroclaw held steady (+0.1%).

The small country of Latvia, on the Baltic Sea, saw the biggest drop in performance across all metrics, as much for its RevPAR (-5.4%), its ADR (-1.2%) or its OR (-2.3 pts), which fell to 53.1%, a result slightly below the annual average (YTD OR 65.9%), also down -4.2 points.

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