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September 2018: an Indian summer for European hotels

Hospitality activity is good this Fall 2018, confirming the stability of all European destinations since the beginning of the year.

European hotel performances are improving for Fall 2018, with some countries even recording very strong growth. Overall, compared to September 2017, RevPAR increased by +3.3% and grew in all segments, despite a slight slowdown on the upscale market. It should be noted that results are not homogeneous: the midscale and budget categories recorded higher results this month, mainly due to an increase in their average daily rates (up by 5.6% and 2.7%, respectively). On the other hand, upscale and economy properties saw their RevPAR grow without any significant increase in their occupancy rate. 


Results Year-to-Date are also positive, with growth in RevPAR by +3.9% since the beginning of the year. The upscale, the lowest performing segment this month, with +2.1% growth, shows the strongest growth YTD (+4.6%), driven by an increase in the occupancy rate (+1.1 points) and an increase in average daily rates (+2.9%).

It is quite notable that positive growth indicators are not observed throughout the area. Three countries recorded double-digit growth in RevPAR compared to September 2017: Hungary (17.1%), Austria (13.3%) and France (10.9%). Results were mainly due to an increase in their average daily rate, respectively 16.6% for Hungary, 13.3% for Austria, and 8.9% for France. In addition, Greece experienced significant growth (RevPAR: +8.5%) and continuity with respect to the summer season, with a sharp increase in average daily rates (+11%).

Denmark illustrates the exception that confirms the rule: its RevPAR is driven by its occupancy rate, on a rebound of 3.5 pts, the best performance for this indicator across all European countries combined, despite a drop in average daily rates by -2.9%.

Germany, the Netherlands and Belgium seem to be continuing at a steady pace, with RevPARs of +2.6%, 0.7% and 0% respectively, reinforcing the attractiveness and stability of these countries in terms of hotel investment.

On the other hand, several countries recorded a further significant drop in their indicators: Portugal, Spain and Italy recorded the largest decreases in terms of RevPAR with -6.1%, -4.5% and -3% respectively. Their metropolitan areas (Barcelona, Madrid, Lisbon, Milan) show a drop in RevPAR by about -10% with all their indicators in the red.

Other countries such as the Czech Republic (-1.6% RevPAR), the United Kingdom (-1.3% RevPAR) and Latvia (-0.4%) saw their results deteriorate compared to the same period last year. It should be noted that Latvia posted an improvement in results over the first nine months of the year (RevPAR: +13%). 

Switzerland, Malta and Luxembourg recorded a downturn in their indicators with a RevPAR down -1.8% for Switzerland, -2.0% for Malta and -2.5% for Luxembourg, despite good performances in Zurich with RevPAR +3.9%, ADR +1.3% and occupancy rate +89.7%.

These developments in European hotel performances reinforce the upward trend observed since the beginning of the year in Europe. The overall occupancy rate reached nearly 81.4% at the end of September reflecting the good health of the hotel industry throughout the European Union for 2018.

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