STR: Terrorism, Brexit affected EMEA hotel performance

Westin Warsaw

According to the latest data from STR, hotels in Europe recorded positive performance for total-year 2016. For all of Europe, occupancy increased by 0.6 percent to 70.4 percent. ADR, meanwhile, grew by 1.5 percent to €111.77, while RevPAR increased by 2.1 percent to €78.64. 

Poland

With security concerns affecting visitor numbers to evergreen destinations like France and Belgium, Poland became a popular alternative. Additionally, the country’s hotels benefited from hosting a variety of major events throughout the year, most notably the July NATO Summit in Warsaw, when the market’s RevPAR increased by 22.1 percent for the month. For the full year, the Polish capital recorded a 10.8-percent increase in RevPAR to PLN227.18. Outside of the capital, Wroclaw was named a 2016 European Capital of Culture and saw occupancy grow by 8.6 percent. ADR, meanwhile, increased by 13.1 percent.

Across the country, occupancy increased by 3.7 percent to 71.3 percent, ADR grew by 7.7 percent to PLN272.60, and RevPAR increased by 11.6 percent to PLN194.34.

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Spain

Similar to Poland, Spain has proven a popular and safe destination as other countries face security concerns. The country's total-year occupancy level was the highest for the country since 1999. At the market level, Barcelona posted RevPAR growth of 9.8 percent, while Madrid recorded growth in the metric of 6.6 percent.

Occupancy grew by 3.5 percent to 74.0 percent, ADR increased 7.8 percent to €108.11, and RevPAR grew by 11.6 percent to €80.01.

United Kingdom

In the second half of 2016, UK hotels posted steady demand growth, but a 2-percent year-over-year increase in supply led to the marginal year-end occupancy decline. London recorded a 6.9-percent growth in occupancy in December, as the pound devaluation has made travel to the destination more affordable for visitors from North America and Europe. For 2017, STR and forecast partner, Tourism Economics, project that “staycations” will play a major role for hotel performance across the UK, as traveling abroad has become more expensive following the devaluation of the pound.

Occupancy in the UK fell 0.2 percent to 77.2 percent, while ADR grew 1.6 percent to £89.21 and RevPAR increased 1.4 percent to £68.88.

Middle East & Africa

Hotels in the Middle East, meanwhile, reported negative total-year 2016 results, while hotels in Africa showed mixed performance.

Overall, occupancy throughout the Middle East fell by 2.2 percent to 66.2 percent. ADR dropped 7.2 percent to $174.60, and RevPAR fell 9.2 percent to US$115.59. In Africa, occupancy declined by 3.6 percent to 55.4 percent, but ADR grew by 10.7 percent to US$108.14 and RevPAR increased by 6.7 percent to US$59.87. 

Egypt

Egypt’s occupancy continued to fall amid ongoing security concerns, dropping 36.2 percent below pre-Arab Spring levels. The devaluation of the Egyptian pound resulted in a sharp increase in ADR when reported in local currency, but when reported in U.S. dollars, year-end ADR growth was 2.5 percent. Egypt has recorded very little supply growth since 2012, while demand has been volatile (-13.9 percent for 2016).

Occupancy fell by -14.5 percent to 45.8 percent, while ADR increased by 31.2 percent to EGP793.97. RevPAR grew 12.3 percent to EGP363.46.

Saudi Arabia

The oil crisis has heavily affected Saudi Arabia’s economy and hotel industry. As STR reported in August 2016, there is a correlation between the drop in oil prices and the downturn in hotel performance and profitability for Gulf Cooperation Council countries. At the market level, Riyadh was heavily affected in 2016 with occupancy down 10.2 percent and ADR down 8.1 percent. 

According to STR analysts, oil is not the only factor affecting the country’s hotels, however, as sharp supply growth has pressured occupancy levels and overall performance. In December, Saudi Arabia’s luxury segment experienced an 18.6 percent increase in supply compared with the same month the previous year, contributing to a 23.3-percent year-over-year RevPAR decline for the country’s Luxury hotels during the month.

Across all segments in the country, Saudi Arabia's hotels reported a 4.8 percent occupancy drop to 59.5 percent, an ADR decline of 3.9 percent to SAR764.08, and a RevPAR drop of 8.5 percent to SAR454.84.

United Arab Emirates

While supply in the United Arab Emirates grew at a rapid pace and ended the year up by 4.8 percent, demand grew at a stronger rate for the first time since 2013, ending the year up by 5 percent. At the market level, Abu Dhabi closed the year with declines in both occupancy (-3.6 percent to 71.7 percent) and ADR (-9.9 percent to AED467.49). Dubai reported a slight increase in occupancy (+0.5 percent to 77.3 percent) but a significant drop in ADR (-9.9 percent to AED711.41).  

Across all of the Emirates, occupancy increased only incrementally (0.3 percent to 75.0 percent), while ADR dropped by -9.2 percent to AED631.51 and RevPAR fell by 9.0 percent to AED473.70.

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