STR: Europe hotels see strong performance increases in Q1 2017

ME London in the middle of London's West End

Concluding with strong growth in March, the European hotel industry reported increases in each of the three key performance metrics during the first quarter of 2017, according to the latest data from STR.

Compared to the first quarter 2016, occupancy in Europe increased by 4.1 percent to 63.5 percent. The average daily rate also improved by 2.3 percent to €100.94, while RevPAR increased by 6.5 percent to €64.06.

Baku

With one of the world’s most improved economies in 2017 and rising 13 spots in the World Economic Forum’s global ranking, Azerbaijan's capital saw massive improvements in hotel performance in the first quarter of the year.

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Occupancy increased by +74.9 percent to 49.5 percent as RevPAR increased by +119.5 percent to AZN84.85 since Q1 2016. While ADR increased by +25.5 percent to AZN171.46 percent, exchange rate fluctuations made the destination cheaper for many international visitors. STR analysts note the performance growth is particularly impressive considering the market experienced significant supply growth of 18.1 percent in 2015 and 6.8 percent in 2016.

Looking ahead, Baku currently has two new hotels in construction and another pair in the planning stage.

Barcelona

March 2017 marked Spain’s 47th consecutive month of year-over-year RevPAR growth, leading RevPAR to rise in Q1 2017 by +7.2 percent to €68.06.

Despite a slight slowdown in occupancy (+2.3 percent to 67.5 percent) and ADR (+4.8 percent to €100.76) compared with January and February, Spain still saw a 3.6 percent increase in RevPAR in March.

Barcelona was the standout market in Q1 with a 13.6 percent increase in RevPAR that was equal parts occupancy and ADR growth.

March was a particularly strong month for Barcelona, with occupancy up 8 percent and ADR up 18 percent. The Mobile World Congress from Feb. 27 to Mar. 22 boosted performance.

The UK

UK hotels continued a run of positive year-over-year performance that started late in 2016. Occupancy increased by +2.6 percent to 70.6 percent. ADR (+4.1 percent to £83.73) and RevPAR (+6.8 percent to £59.12) also saw increases.

March was the strongest growth month of the quarter (RevPAR improved by 8.3 percent), thanks in part to a favorable Easter calendar shift. STR analysts also attribute performance to the Brexit and the devaluation of the British pound with a subsequent increase in domestic and international hotel demand.

Notably, the Westminster attack on March 22 did not disrupt performance in London, the country’s largest market.

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