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Trends

October 2019: only half of Europe is performing well

Europe is clearly split in two parts this month, one part showing significant progress and the other showing a decline in growth. Hotel performance is therefore neutral, monthly indicators showing a stagnant trend.

The European hotel industry posted very slight growth in October, with +0.1 occupancy points for an Occupancy Rate (OR) of 77.1%, and +0.3% Average Daily Rate (ADR) to €103.70 excluding VAT. RevPAR grew by +0.4% to reach €80.00 excluding VAT.

One segment is down: Economy, down -0.4 pt (OR 77.6%), despite an increasing ADR (+0.3%; €76.90 ex VAT), leading to a decline in RevPAR alone (-0.1% to €59.70 ex VAT) across all segments. 

The Midscale recorded a growth in demand (+0.3 pt; OR 76.9%) but a decrease in ADR (-0.2%; €97.80 ex VAT) for a steady RevPAR (+0.1%; €75.20 ex VAT).

The Budget posted the best RevPAR growth (+2.5%; €37.20 ex VAT) thanks to a scissor effect produced by higher ADR (+2.4%; €51.60 ex VAT) despite a steady trend in occupancy (+0.1 pt; OR 72.1%).

As for the Upscale, it posted the best results, with an OR of 79.2% (+0.3 pt), an ADR of €149.90 excluding VAT (+0.2%) and a RevPAR up +0.5% to €118.70 excluding VAT.

These steady performances are the result of a double reality in Europe: on the one hand, seven markets (Germany, Austria, Belgium, the Netherlands, Italy, Portugal and Greece) are driving results up; on the other hand, eight countries (United Kingdom, Latvia, Luxembourg, Spain, France, Poland, Hungary and the Czech Republic) are dropping down, with some cases presenting particular situations.

First of all, the countries that have experienced growth in demand are mainly destinations with a strong presence in the business tourism market (Germany +1.2 pt, Austria +0.1 pt, Belgium +1.5 pt, Netherlands +1.2 pt) or that benefit from a very extended leisure season, thus maintaining a good level of performance throughout the whole year (Italy +2.7 pts - best OR growth, Portugal +0.9 pt, and Greece +1.7 pt).

All RevPARs are up in these destinations, with record growth beaten by Italy at +7.8% (to €103.80 ex VAT). However, two exceptions stand out: two countries have lowered their ADR, leading to a decline in RevPAR of -0.1% for the Netherlands (€105.80 ex VAT) - while the latter has the best OR in Europe this month (85.2%), and -4.1% for Austria (€86.10 ex VAT) - second best OR (84.9%).

The other countries, namely the United Kingdom (-1.2 pt; OR 83.3%), Latvia (-5.5 pts - largest OR decrease; 65.9%), Luxembourg (-1.9 pt; 80.3%), Spain (-0.4 pt ; 77.6%), France (-0.5 pt; 72.6%), Poland (-0.8 pt; 74.7%), Hungary (-0.4 pt; 84.6%) and the Czech Republic (-0.5 pt; 83.7%) all lost market share.

However, not all of them reacted in the same way as for the rates. Some have raised their ADR to compensate for these losses, such as Spain (+3.1%; €102.90 ex VAT), Poland (+3.8%; €67.70 ex VAT), Hungary (+5.8%; €91.40 ex VAT), the Czech Republic (+6.9%; €89.90 ex VAT) and Luxembourg (+4.1%; €157.90 ex VAT - best ADR).

The others decreased their ADR, particularly the countries affected by multiple disruptions, namely the United Kingdom (ADR -1.0%, RevPAR -2.3%) with Brexit, Latvia (ADR -1.5%, RevPAR -9.1%) and France (ADR -3.0%, RevPAR -3.6%) with several climatic (storms and floods in the southwest of France) or environmental (effect of the fire at the Lubrizol plant in Rouen, which was felt throughout October) problems.

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