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May 2016: Slow growth, widening gap between European hotel markets

After posting solid growth in April, European hotels did not repeat that performance in May. The gap is widening between European hotel markets: will countries currently left behind finally catch up with the frontrunners?

Revenue per Available Room (RevPAR) in European Hotels rose only modestly in May across the continent: +1.2% from the same month in 2015. Occupancy rates are at a standstill (-0.1 point); they slightly decreased in most hotel categories except for the budget segment. Average daily rates keep growing but at a moderate pace: +1.4%, after a promising +3.6% in April. Upscale and luxury hotels, especially, have seen their results falter: they recorded decreasing occupancy rates (-0.4 point) and growth in average daily rates came to a halt (+0.8%). Registering a meager +0.2% increase compared to last year, RevPAR in upscale properties shows no sign of progress as summer approaches.

May 2016: Monthly results of hotel chains by category

Once more, May stands out for the significant contrasts between European markets. Taking over from Central European countries, which boosted EU performance in April, the Iberian Peninsula has been leading the way this month. Portugal posted particularly impressive performance compared to last year (+12.1% in RevPAR), along with neighboring Spain, which is on a similar upward trend (+11.5% in RevPAR). Both countries are capitalizing on the positive impact of their economic recovery, while at the same time benefiting from strong international demand as uncertainty remains significant in the Southern shores of the Mediterranean Sea. Other European markets see their performances improve once again, especially in the Netherlands and Austria. Hotels in both countries registered significant gains in RevPAR last month, with an increase of 9.5% and 7% respectively.

On the other hand, the situation is not getting any better for Belgian hotels. Following the terror attacks that hit the capital in March, RevPAR dropped by -19.6% across the country compared to May 2015. Occupancy rates plunged by 15.3 points to reach 64.9%. In France, hotel performances showed modest signs of stabilization, with RevPAR down -1.6% compared to -9.4% in April.

Finally, hotels in Italy and the Czech Republic felt the after-effects of their busy event calendar last year, with RevPAR decreasing by -3.5% and -9.3%, respectively. For the record, the Expo Milano was held in Milan from May 1 to October 31, 2015, while the popular Venice Art Biennale ran from May 9 to November 22, 2015. In the Czech Republic, Prague and Ostrava hosted the Ice Hockey World Championship in May 2015 (1-17), thus boosting hotel occupancy and average rates last year.

May 2016: Monthly results of hotel chains by country

Since the beginning of the year, Belgian and French hoteliers are unsurprisingly the only ones to record a fall in RevPAR. YTD RevPAR over the first five months of the year is down by -10.5% in Belgium, -4.3% in France. In contrast, countries of the Visegrád Group, including Poland (+8.3% YTD), Hungary (+8.5%), and the Czech Republic (+4.5%) record very promising results. Other markets are on a strong growth trend so far in 2016, with a 16% increase in RevPAR in Spain, 11.6% in the Netherlands, and 8.2% in Portugal over the first five months of the year. Hotels in Germany also posted better results than in the other larger European countries, with a 6.2% gain in RevPAR since January.

Throughout Europe's entire hotel industry, the overall RevPAR increased by 2.1% from January to May 2016. This positive trend is driven by a slight rebound in occupancy (+0.4 point in occupancy rate), and a moderate increase in average daily rates (+1.5%). Despite significant difficulties encountered by several major European markets, the overall picture is thus globally positive for Europe's hotel industry in 2016.

Also read:

  • 2015 in Europe: hotel KPIs continue to grow, driven by southern countries and CEECs
  • April 2016: Europe's hotel industry improves overall, despite a deepening gap

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