Good news for Europe's hotel scene: The latest results from the ECM-MKG European Destinations Observatory report indicate that after several difficult years for more than a few European countries, 2014 saw the first signs of economic growth, and hotel activity is rebounding.
Europe's hotel industry ended 2014 with a 3.8 percent increase in RevPAR and an occupancy rate of around 70 percent, increasing by 1.9 points over 2013.
The European average daily rates, still stagnant in 2013, rose 2 percent in 2014. The increasing number of arrivals, especially international ones, has led hoteliers to raise their rates. Renewed growth in the ADR is also the result of a budding economic recovery in some European countries where domestic travel is gradually less impeded by a weak purchasing power.
While most European countries are on a growth trend, the return to activity is driven by Southern Europe: Lisbon (+3.7 points), Madrid (+3.9 points), Seville (+4.8 points) and Zaragoza (+6.0 points) all saw strong growths in occupancy rate. Those cities (and their respective countries) suffered the impact of the financial crisis in 2008 but kept their appeal to foreign clientele, particularly in a tense global geopolitical and economic context. As a result, their price competitiveness have fully benefited to their tourism and hotel industry. Spain has ended 2014 with a new record of tourist arrivals while cities like Lisbon, financially attractive to foreign clientele, benefit from the dynamism of international arrivals and comes at the top of this recovery with a strong increase in RevPAR by 7.9 percent.
In Central Europe, Budapest stood out with double-digit growth in its RevPAR and a strong international clientele, driven by the democratisation of airline connections and attractive prices.
Northern and Western Europe
The hotel industry in Northern and Western Europe showed its resistance with indicators up in most countries. Copenhagen saw its RevPAR increase due to the high occupancy rate of the congress sector.
London, once again shows the highest occupancy rate in this part of Europe, close to 86 percent, and saw its RevPAR increase by 3.4 percent in 2014. Great Britain has seen solid visitor and hotel numbers since London hosted the Olympics in 2012.
In Germany, the success of the major trade fairs and expos together with the growing popularity of the country as a weekend destination both benefited the hotel industry.
This is not to suggest that everything is perfect, however: While London saw high occupancy rates for 2014, the city is seeing nearly flat hotel performance for the first three months of 2015, according to STR Global’s preliminary data. Based on daily data from March, London reported increases in supply (+3.7 percent) and demand (+2.0 percent); a 1.7-percent decrease in occupancy to 78.6 percent; a 1.1-percent increase in average daily rate to GBP133.77; and a 0.6-percent decrease in revenue per available room to GBP105.16.
“Whilst London reported a 0.6-percent year-over-year decrease in RevPAR, absolute figures remained high at GBP105.00 for March,” Elizabeth Winkle, managing director of STR Global, said in a statement. “An increase in supply outpaced room demand growth in the city. The new rooms in the capital put pressure on occupancy resulting in year-over-year decline; however, levels remain above 75 percent. ADR, on the other hand, fared well this month with growth of 1.1 percent”.