STR's IHIF Preview: European Hotel Trends
STR: Europe hotel industry posted growth in 2016, but declines in several key markets
LONDON—Despite declines across several major markets, Europe’s hotel industry posted a 2.1% year-over-year increase in revenue per available room (RevPAR) in 2016, according to data from STR.
Previewing his presentation for IHIF 2017, Robin Rossmann, STR’s managing director, notes that security concerns have weighed heavily on Europe’s hotel performance during the past two years.
“It is encouraging that the region as a whole posted growth in 2016, especially considering all that occurred during the year,” Rossmann said. “In terms of major markets, Paris and Brussels should start to regain stability this year, provided there are no further security threats. London hotels should benefit from a weak sterling, but this will be partially offset by continued supply growth, as there are more rooms in London’s pipeline than in any European country with the exception of Germany and Russia.”
Paris, still recovering from multiple attacks, reported a 13.7% decline in RevPAR in 2016, mainly as a result of a near double-digit drop in occupancy (-9.5% to 69.6%). Hosting the 2016 UEFA Euro tournament during the summer provided minimal impact on performance. In December 2016, Paris recorded RevPAR growth after 16 consecutive months of RevPAR declines. That positive performance extended into January 2017 (+22.7%) as well.
Brussels also struggled, reporting an 18.3% RevPAR decline for 2016, following the extended security lockdown in November 2015 and the March 2016 bombings. November 2016 broke an eight-month streak of negative RevPAR performance in the market.
Istanbul saw a 37.4% decline in RevPAR for the year as Turkey has seen performance struggles as a result of terrorist attacks, in addition to domestic and international political issues. At the country level, Turkey’s RevPAR was down 34.3%.
A number of factors affected performance in London in 2016, most importantly supply growth (+2.7%). The market reported performance declines during the first few months of the year as it experienced some “aftershock” from the November 2015 Paris attacks. The pound devaluation following the June Brexit vote has made the U.K. a more affordable destination for many international leisure visitors, and December 2016 resulted in the city’s highest year-over-year RevPAR growth since the 2012 Olympics. STR and forecast partner Tourism Economics project that the pound devaluation should have more of a positive impact on Regional U.K. (U.K. excluding London) moving forward.
On the other end of the spectrum, Spain and Portugal have benefitted from a shift in international demand from other destinations in Europe and Northern Africa. Markets like Madrid (RevPAR: +6.7%), Barcelona (RevPAR: +9.7%) and Lisbon (RevPAR: +8.0%) are now considered safer destinations, according to STR analysts.
Several markets in Eastern Europe also posted substantial growth. Warsaw, which has also been regarded as a relatively secure location recently, posted a 10.3% growth in RevPAR in 2016. The Polish capital hosted a number of major events throughout the year, most notably the July NATO Summit, when the market’s RevPAR jumped 24.5%.
Rossmann will present European and global hotel performance trends in Berlin on Monday, 6 March and will also moderate a panel discussion on the alternative accommodation sector and Airbnb on Tuesday, 7 March.
Global Hotel Study: 2016 in Review
STR has undertaken its first ever global year-end review of the hotel industry. The report includes regional overviews, ranking which markets reported the strongest and weakest performances by region for 2016, as well as supply growth, compression and forecast insights for the top three markets to watch in each region. The report contains more than 60 graphs and is available for purchase by region or as a full package. For more information, please contact: firstname.lastname@example.org.
A note to editors: As of 1 March 2016, all references to STR data and analysis should cite “STR” as the source. Please refrain from citing “STR, Inc.” “Smith Travel Research” or “STR Global” in sourcing as those names no longer fit within the updated STR brand.
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