2012 will be a year of uneven recovery across Europe unless the financial, fiscal and Euro crisis worsens substantially, in which case all bets are off
- United Kingdom :
The UK hotel market has continued its recovery from the global financial crisis, with year-to-date RevPAR to September 2011 increasing by 5.9 % to £58.37 according to STR Global (the source for all the performance data you see here). This recovery has largely been driven by ADR growth and in particular that of London, the driving force behind overall UK hotel performance. This growth in part illustrates the continued revival in corporate travel, which is less price sensitive than leisure demand, in addition to the continued benefit of the depreciation of Sterling, making visiting the country more affordable internationally.
- France :
Like most of the European economies hit by the debt crisis, France saw its growth rate melting in 2011. Real GDP grew by 1 % over the first half and slowed to 0.3 % during the third quarter, while a 0 % growth is expected for the last quarter.
French hoteliers took advantage of higher occupancies recorded in 2010 to increase their rates in the upper segments, while growth remained very moderate in the economy and budget segments. As a result, the average RevPAR for 2011 is expected to grow at the same pace as for 2010. On the development side, financing organic development is still an issue as credit terms and equity to debt ratios are very challenging : 40 to 50 % equity to debt ratio is required assorted
- Germany :
According to the German Hotel Association (IHA) the number of overnight stays totaled 85.2 million, a growth of 6.9 % resulting in an increased turnover rate of 3.8 % in the first term of 2011. Furthermore, the ARR also recorded a rise in price amounting to €93 ; however, this was still less than the average rate in Europe (€99.00) which rose by 4.1 %. This growth process also had an impact on the willingness to invest. In February 2011, almost 80 % of all hoteliers surveyed planned to invest the same amount or even more in their hotel facilities. Hoteliers could proclaim a positive increase in revenue which was not solely invested in goods but also in the labor force. The Federal Labor Office reported about 7,000 employees more than in the previous year within the hotel industry. This is partially due to the « bed tax, » a new introduction in effect because of the decrease in the VAT. with a 6 % interest rate for a 12/15 years loan.
- Russia :
It's a relatively inspiring tale. All being said, 2011 has been a reasonably good year, considering the global economic downturn, which impacted Russia from late 2008 until autumn 2010. New openings at all levels in Moscow, such as the upscale new InterContinental Hotel ; the W and Four Seasons in St. Petersburg (2012), in addition to a portfolio of mid-market and budget hotels and numerous international mid-market brands, such as Park Inn, Courtyard by Marriott, Ibis and Novotel to name a few in key regional cities. The economy in Russia has proven to be more resilient than its European counterparts, and with oil prices still relatively high, the prognosis therefore must be considered good going forward ; however, Russia has shown that it is not economically immune to global downturns, as evidenced by a significant reduction in investment in the hospitality sector during 2009/2010. The main stumbling block remains the lack of local or international bank finance for hotel projects in Russia - and indeed, neighboring CIS countries as well.
- Spain :
In 2011, Spain has seen a long-awaited, if somewhat timid, recovery in the tourism market. After 2009, when Spain logged the lowest figures in history in this sector, the country received 20.9 million visitors during the 2011 summer months only - the third highest in history.
The economic downturn of the last 3 years has left Spain in a very weak financial situation. However, tourism is set to take big role in the country?s recovery. The encouraging results of the past year had an immediate positive impact on transactions and development. In the first six months of 2011, 15 hotel transactions worth a total of EUR 400 million had been agreed, an amount representing 75 % of the total of all transactions from the previous year.
- Scandinavia :
2011 has been a good year for hotels in Scandinavia, with RevPAR growth in all countries and capital cities. Both occupancy and ADR levels are up in all countries, numbers for the year through September show. Scandinavia's largest hotel, the 812-room Comwell Bella Sky, opened in May in Ørestaden, just outside Copenhagen. The regions tallest hotel, the Scandic Victoria Tower in Kista, outside Stockholm (299 rooms, 34 floors, 118 meters tall) opened in September.
Denmark : the summer of 2011 was the best on record for Danish hotels, with an increase in overnight stays of almost 9 % over 2010 (for the months of June, July and August). Total revenue is lagging behind, though, indicating a lower spend per guest. A significant increase in capacity, especially in Copenhagen, has been absorbed by higher demand.
Sweden : the industrially driven Swedish economy is also performing well. High GDP growth in 2011 (compared to European peers) has resulted in higher hotel demand and higher rates. Gothenburg, Sweden's second largest city, is especially outperforming, with double digit RevPAR growth expected for the year.
- The Netherlands :
The hotel market in The Netherlands showed a modest recovery in 2010, after the economic crisis led to strong declines in 2008 and 2009. While the recovery continued in the first half of 2011, the growing concern regarding the debt crisis and possible Euro crisis has increased the uncertainty for the coming months. As shown in the graph below, there is a strong correspondence between GDP growth and RevPAR growth in The Netherlands.
- Ireland :
In recent years, the performance of the Irish hotel industry has been severely impacted by several factors - oversupply in the market, a fall-off in overseas visitor numbers, over-reliance on the domestic market and rate discounting. One of the main talking points within the industry is the issue of oversupply. Hotel room stock in Ireland increased by over 26,000 rooms between 1999 and 2009. Almost half of these were introduced in 2006 and 2007. This surge in development coincided with the introduction of the hotel capital allowance scheme. This scheme allowed for a 7-year rate of write-off of capital expenditure incurred in the construction/refurbishment of hotels. The scheme was extended until 2008.
- Poland :
2011 has been another year of recovery from the crisis that hit the market in 2009 resulting from the global financial crisis. In 2011, as well as in 2010, the main indicators on the market (occupancy rate, ADR, RevPAR) were growing and were close to, or for some hotels or regions, actually as high as the results from 2008, which was the best year for hoteliers before the crisis.
- The Balkans :
The Balkans, a culturally and economically diverse region which is still unintegrated and financially dependent on the EU, together with Greece as an issue, represents a less developed EU emerging market. Although influenced by the crisis, some new projects are happening, revealing the positive expectations of international investors regarding the future.
Croatia : in 2011, Croatian tourism continued its growth with a 7 % increase in overnights and ADR recovery. With EU negotiations finished, 2013 is the expected year Croatia will join the EU, and therefore the positive effects of higher volumes and further growth are expected in 2012. Croatia is still adjusting its investment and general framework in order to provide a better environment for the hotel business. International hotel brands are to open several hotels in 2012, predominantly in Zagreb and the coastal region (Istria, Split and Dubrovnik), with Hilton as the most active brand.
Although the crisis hit Bulgaria two years ago, the hotel market is still feeling the impact in terms of ADR, while occupancy - though slightly recovered - is still not providing a profitable framework for the majority of non-branded hotels.
Romanian tourism is mostly business-related, with Bucharest the most important city destination. Room oversupply resulted in hotels struggling to maintain profitable performances.
Montenegro in 2011 is continuing the growth begun in 2010 after it began to recover from the global crisis. In 2011, estimated growth in terms of overnights will be around 10 %.
Chisinau, the Moldovan capital, generates 80 % of all hotel overnights achieved in Moldova, with MICE being the most important market segment.
The developing tourism sector in Serbia is focused on business travel to the capital and some second-tier cities. In 2011, the tourism sector experienced an upward trend in occupancy and ADRs, but is still recovering from the crisis.
- Italie :
After being hit hard by the global economic recession, and despite the difficult position of the Italian economy, the Italian hotel market recovered in 2011 with all indicators up. Hotel performance figures were boosted by the increase in demand, both from local and international markets, with an increase, respectively of +1.9 % for local travelers for the first half of 2011, and +0.9 % for international travelers, according to Federalberghi. Indeed, 2011 was a year full of major events, attracting additional local and international visitors, such as the 150th anniversary of the Italian Republic in March, and above all the beatification of Pope Jean Paul II in May, which attracted more than a million visitors from all over the world.