Europe: reasons to be cheerful

At the end of this year most upmarket hotels in Europe will have reached their targets, at least after they've added their expected business up until New Year's Eve.

In contrast to often gloomy outlooks from worldwide trade and industry experts shocked by the political and financial crises, particularly in the EU, most hoteliers in Europe are looking back with quiet contentment.

However, whereas most European capitals and hotels fared pretty well this year - our friends in chain hotels in countries such the Netherlands and Czechia saw RevPAR rise by over 10% from September 2010 to September 2011 - hoteliers in the metropolis of Greece saw both their occupancy rates and RevPARs tumble. In August, Athens showed a cumulated RevPAR of only €67.28 compared with London (€123.48) and Paris (€181.00). No wonder. Political unrest is poison for tourism and business travel alike - and for the hospitality industry in particular. It also influences the development of new hotel projects, so we are not surprised that just one 80-room (boutique) hotel opened this year in the centre of Athens.

Surprisingly, the hospitality sector in financially battered countries like Portugal, Spain and Italy is showing considerable resilience. Although many cities have not reached the RevPAR peaks they enjoyed before the recession years of 2008/09, it was the deluxe hotels in the capitals and the resort hotels that took the bonus points - even in the Greek resorts. Unrest in some North African Arab countries contributed to increasingly positive results in the Greek islands, Spain, Italy and Portugal as tourists deviated away from North Africa. However, outside of the tourism hubs, hoteliers on the Iberian peninsula fight with rising costs, unemployment and taxes, plus reduced income due to government austerity programmes.

In Eastern Europe though, Poland and the Baltic countries are seeing record occupancies and revenue levels, even though rates in the Baltics have not completely recovered.

Russia is a mixed picture. St Petersburg suffered a 20% downturn in the first half of 2011 compared to 2010, while Moscow went up by 12%, proving it is still one of the most expensive cities in the world.

Germany (RevPAR +3%) performed well even though hotel capacities are still on the rise (especially in Berlin) backed by a strong economy and tourists staying inland. The UK is up 4.5%, thanks in the main to a booming London market. Where the classical business and tourist destinations of Europe are concerned, London remains by far the most popular travel destination with occupancy rates above 80%, followed by Amsterdam and Paris. The most expensive hotel cities in Europe are Geneva, Paris and Zurich.

Some new hotel developments came to a halt due to lack of financing, but where the economy is still in good shape (for instance in Germany) there are no signs of a negative slide in terms of results or hotel expansion plans.
Research by STR Global and PricewaterhouseCoopers reveals that the highest RevPAR growth in 2012 is expected in Stockholm (11.3%), Istanbul (10.0%), Amsterdam (9.0%), Dublin (8.8%) and London (8.3%). However, no one can predict the impact of geopolitical events in some Arab countries or austerity measures, tax increases and inflation in some eurozone countries, which would inevitably influence both economic development and hotel performance.

This article was first published in our sister publication Hotel Management International.