Europe snapshot: RevPAR passes U.S. numbers; Starwood's growth plan

W Amsterdam

Starwood InfographicThe 19th International Hotel Investment Forum is underway in Berlin, and some interesting stats are emerging about Europe's overall hotel scene. A new report from STR indicates that 2015 was the first year since 2010 in which the European hotel industry passed hotels in the U.S. in year-over-year revenue per available room growth. This accomplishment is especially notable considering the ongoing migrant crisis throughout Europe and the terrorist attacks in various countries over the last few months. 

Europe’s year-end 2015 RevPAR growth reached +6.9 percent to $83.94, the report indicated, while growth in the U.S. hit +6.3 percent to $78.65.

"Both the U.S. and Europe have reported six consecutive years of RevPAR growth since each experienced a double-digit decline following the financial crisis in 2009. From 2011 to 2014, the U.S. consistently experienced a higher year-end growth rate. In 2014, U.S. RevPAR growth reached +8.1 percent compared to +4.3 percent for Europe."

According to STR analysts, the weakened Euro and displaced demand from North Africa "played major roles" in increased demand. European hotels reported exceptionally high performances in the summer months, reaching +9.9 percent RevPAR growth in June, +13.0 percent in July and +8.4 percent in August.  

Major European markets with notable RevPAR growth for year-end 2015 include:
Amsterdam, Netherlands (+12.1 percent)
Dublin, Ireland (+23.3 percent)
Barcelona, Spain (+11.3 percent)
Milan, Italy (+30.3 percent)
Warsaw, Poland (+9.8 percent)
Prague, Czech Republic (+14.6 percent)

Europe’s strong performance trend has continued into 2016, with the region finishing the month of January at +3.0 percent RevPAR growth versus +2.5 percent in the U.S. This also marks the first time since 2010 that Europe has opened the year with higher RevPAR growth than the U.S.

Even better, Robin Rossmann, managing director for STR, anticipated that Europe would continue to see strong numbers going forward in 2016. “While demand remains high in both markets, at 3.0 percent in the U.S. and 2.9 percent in Europe, it will be interesting to see how the high projected supply growth in the U.S. will put pressure on hotel occupancy, while Europe’s supply growth trend remains slow and steady,” Rossman said. Rossman is set to give a presentation at IHIF tomorrow. 

Starwood's Europe Push
Global brands are also stepping up their investment in Europe. Starwood Hotels & Resorts Worldwide, for example, had "a record 18 organic hotel openings in 2015" and more than 30 hotels already under development and expected to open in the next five years. Luxury openings from last year included The St. Regis Istanbul and W Amsterdam, as well as four The Luxury Collection hotels in destinations such as Prague, Bodrum and Bratislava. Starwood also introduced its new Tribute Portfolio brand, a collection of outstanding independent hotels, to Europe with the Great Northern Hotel in London.

Looking ahead, Starwood is launching the Tribute Portfolio brand in France with Le Metropolitan and Le Dokhan’s (both located in the upmarket 16th Arrondissement of Paris), diversifying its brand footprint in Italy and expanding its mid-market brands in the United Kingdom, The Netherlands, Russia and Turkey. “Our growth forecast for Europe is stronger than ever with over 30 hotels set to open across our 10 distinct lifestyle brands by 2020,” Simon Turner, president of global development for Starwood Hotels & Resorts Worldwide, said in a statement.

“We maintained a steady transaction pace in 2015 with conversions driving almost 40 percent of new hotel signings across Europe, reflecting strong owner interest in our design-led brands and confidence in Starwood’s powerful global systems,” added Michael Wale, president, Starwood Hotels & Resorts, Europe, Africa and Middle East. “We are on track to open close to 10 hotels in Europe this year, introducing our distinct brands to more new markets, and continue to work with our partners on further investments in our existing Sheraton and Le Méridien hotels.”

The W brand is on track to reach over 75 hotels globally by 2020, with a Madrid hotel recently signed for 2018. The Westin brand has two openings slated for Europe: The Westin Hamburg on top of the new Elbe Philharmonic Hall on the river Elbe, and The Westin La Quinta Golf & Spa Resort, a conversion in the Golf Valley near Marbella. Milestone Le Méridien projects this year include reentering Italy by the end of this year with Le Méridien Visconti Rome, and the renovation of its first and flagship property, Le Méridien Etoile in Paris, as well as renovated lobby spaces in Le Méridien hotels in Vienna and Hamburg.

The Sheraton brand will add 150 new Sheraton hotels around the globe by 2020. Echoing the company’s conversion strategy, recent examples include Sheraton Cascais Resort, which became Starwood’s third Sheraton hotel in Portugal when it joined the brand last month, and Sheraton Donnafugata in Sicily, which will open in May. Sheraton Park Lane in London, Sheraton Berlin Grand Hotel Esplanade and Sheraton Paris Airport Hotel & Conference Centre are all set to complete renovations later this year.

Element Hotels opened in the Netherlands earlier this year with the opening of Element Amsterdam in the Buitenveldert business hub. Four Points by Sheraton has Starwood’s fastest growing pipeline globally. Following its entry into Turkey last year, the brand will expand its footprint in the country over the next four years with new signings in Atasehir and Kagithane districts in Istanbul and the coastal city of Izmir. Aloft recently announced the Aloft Brighton, which will be the brand’s fourth hotel in the United Kingdom when it opens next year.