Dublin, Ireland

Growth expected in European hotel market

Monday, March 24, 2014

The European hotel market is expected to see economic growth in 2014 and 2015, says a new report from PricewaterhouseCoopers (PwC).

The third annual PwC European Cities Hotel Forecast expects that there will be growth in the hotel sector in 17 of 18 major European cities. The cities are either crucial gateway cities, or centres for business and tourism.

Dublin is expected to have the greatest revenue per available room (RevPAR) in 2014 out of the featured cities, followed by London and Paris. Trailing the top three are Edinburgh, Berlin, Frankfurt, Vienna and Moscow. In 2015, it is expected that London, followed by Dublin, will lead RevPAR growth.

Growth in Dublin will be driven by a lack of new supply and strong demand over the next two years. Though London will have sizeable supply increases, strong demand will drive the RevPAR growth.

The hotel market returned to its post-recession peak in 2013, though it remains behind 2007 terms. Last year, the average Europe-wide RevPAR was 6.7 per cent lower than the 2007 high, but was 18.5 per cent lower when inflation was factored in. This disparity shows that the hotel sector has underperformed the wider economy, as real GDP across the European Union was only marginally below the 2007 peak.

Hotel occupancy growth has been closer to the 2007 peak. Occupancy in 2013 reached 67.4 per cent, compared to 68.0 per cent in 2007.

The report identified the following five megatrends across the European hotel market:

  • Shifts in global economic power
  • Demographics and social change
  • Technological change
  • Accelerating urbanization
  • Sustainability, climate change and scarce resources

These megatrends are expected to affect key facets of the hotel industry, including clientele, competition, business models and technology. With changes to the demographics of clientele, hotels may also need to shift their services.

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