European hotels reported 4.2% growth in occupancy to 70.3% in November 2016 (Y/Y). Average daily rate (ADR), rose 1.5% to €107.14. Revenue per available room (RevPAR) increased 5.8% to €75.36.

Despite this, Western European hotels showed the worst performance year-over-year on the continent with both occupancy and RevPAR down respectively by 0.8% and 0.5%.

Performance levels varied greatly from one country to another. Expressed in local currency, (year-over-year comparisons), Italy recorded a 4.9% increase in occupancy to 64.1%, but a 7.3% decline in ADR to €108.11 while RevPAR was down 2.7% to €69.33. The country’s ADR performance was brought down by a decline in Milan (-18.6%), which posted year-over-year performance decreases. However the result is distorted by the fact that 2015 was an exceptional year due to the city’s hosting of the World Expo Milano 2015. By contrary, smaller markets such as Sicily, Veneto and Emilia Romagna each posted RevPAR increases for the month.

The Netherlands posted 2.9% growth in occupancy to 70.2% and a 1.4% increase in ADR to  €109.49. As a result, RevPAR rose 4.3% to €76.83. The absolute ADR level was the highest for a November in the country since 2008. The Netherlands’ performance is heavily influenced by the airport and inner submarkets of its capital city, Amsterdam.

Spain posted increases in both occupancy (+1.0% to 70.8%) and ADR (+3.9% to €98.08), resulting in 4.9% growth in RevPAR to €69.44. The occupancy level was the highest for a November in Spain since 2000. In addition, the country reports 43 consecutive months of year-over-year RevPAR growth. November’s performance was largely driven by hotels in regional areas, while Madrid and Barcelona reported flat performance. Safety issues in large European cities might explain the mediocre performance of Spain’s two largest cities.

European Cities’ Evolution

Berlin posted record highs for the month of November across all key performance levels: occupancy (+4.7% to 81.1%), ADR (+1.5% to €93.42) and RevPAR (+6.3% to €75.76). Breaking down the market’s performance by submarket, the Berlin Surrounding Area recorded double-digit growth in RevPAR. However, STR expects that the attack on Berlin Christmas Market on December 19 is likely to have an impact on hotel performance levels, primarily in the short term. STR will release preliminary December data for Berlin during the second week of January.

London recorded its strongest month of 2016 in terms of growth with an 8.0% increase in RevPAR to GBP130.33. This was due to a 5.3% lift in occupancy to 85.9% and a 2.6% increase in ADR to GBP151.65. STR analysts note that the results are in comparison with November 2015, when London’s hotel market experienced an aftershock following the terror attacks in Paris, France. The weakening pound also stimulated tourism in London and the UK and should continue to stimulate the growth of the tourism industry in 2017, according to experts.

The dynamics of Europe’s hotel industry can be observed in the number of projects under contract (construction, final planning and planning stage). According to STR’s November 2016 Pipeline Report, Europe recorded 156,368 rooms in 1,017 projects up by 13.3% compared with November 2015 (in rooms numbers). The number of rooms in construction represented 68,496 rooms in 439 projects, up by 23.1% year-over-year. Among the best performing countries, the United Kingdom reported the most rooms in construction with 17,551 rooms in 149 hotels, followed by Germany (11,418 rooms in 54 hotels), Turkey (8,369 rooms in 50 hotels) and Russia (7,452 rooms in 38 hotels).

London, Berlin but also Amsterdam were driving the growth in occupancy among European large cities in November 2016 and since the beginning of the year.

Table: Europe Hotel Performance (Data in US Dollars)


Article by LUC CITRINO