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Analysis

Slowdown in performance growth against a backdrop of supply expansion [2/2]

In 2016, the RevPAR of the global hotel industry is up 1.9%. Although this figure is down with respect to 2015 (+3.3%), these are nonetheless very favorable results: on the one hand because this is the seventh year of continuous growth and on the other because it happened within a context of strong recent growth in the hotel supply.

For more information, see the first part of this article.

More specifically concerning the budget and economy hotel situation, one observation deserves additional explanation: globally speaking, the average daily rate of the budget hotel segment surpasses that of hotels positioned on the economy segment (€58.8 euros and €56.8 respectively). This result is due to the different locations and growth dynamics for these two types of products. The budget supply is essentially focused on mature markets in North America (essentially the United States) and Western Europe, especially France and the United Kingdom, while the economy segment is now widespread in the economies of emerging countries and, of course, in China, where the average daily rate remains well below levels that may be reached on more advanced markets for a similar product. Through simple mechanics, the average daily rate of economy hotels is thus lowered by their strong presence in low-priced areas. Excluding China, the average daily rate at economy hotels is €78, meaning there is a real gap with respect to prices of budget products. 

The year 2016 is characterized by contrasting changes in demand between major regions worldwide. Europe posts a significant drop in occupancy rate and average daily rates following the terrorist attacks in France and Belgium. North America, and the United States in particular, also experienced a drop in demand that is leading to a stagnating occupancy rate, but results are driven by average daily rates. Asia, and major Chinese groups, also showed a drop in occupancy, which is hardly surprising considering the slump and reorientation of Chinese growth within a context of strong supply growth.

Most major groups post results that are stagnating or down in Latin America. Within a very perturbed context, the MEA region is experiencing major difficulties with average daily rates generally on a downtrend. While the geopolitical context remains uncertain and the risk of terrorist attacks remains high, expectations in terms of business are more optimistic. Growth is expected by 2017 and 2018, particularly on more advanced markets such as the United States and Europe, which should continue its recovery despite Brexit discussions.

If you wish to access the complete file, find the entire 2016/2017 worldwilde hospitality report on our store.

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