After some upheaval and uncertainty in 2016, travel prospects, and by extension hotel prospects, are looking more positive this year in Europe as many parts of the region expect to see large growth in tourism and economy.
Europe will have a healthy travel economy in 2017
Even though 2016 attracted 12 million more visitors to Europe than 2015 (totalling 620 million international visitors), 2017 is expected to be even better.
In its report, PwC Global, expects this to be driven by consumer spending as disposable incomes and employment rise. Ireland and Spain will be star performers, with average annual growth of around 3.3% and 2.3% respectively.
In the eurozone, gross domestic profit is predicted to rise by 1.5% this year. With Paris in the final stage of bidding to host the 2024 Olympic and Paralympic Games, future prospects appear just as bright.
Domestic tourism heads to London while Eastern Europe sees a rise in popularity
Sojern’s quarterly outlook reports that London will be the most popular short-haul trip for Europeans, followed by Barcelona, Lisbon, Amsterdam, and Paris. This pushes Rome out of the top five. In this segment, 68% of trips will be undertaken by a single traveller and the most popular trip duration is zero to three days.
On the international front, the capitals are swelling with tourists so travellers are seeking out the delights of less-developed eastern nations like Montenegro, Slovenia, and Georgia.
This backed by the numbers, with IPK International forecasting 2.8% growth in the region for 2017 and 2.9% in 2018.
Where will hotels see the strongest performance?
- Dublin will boast the highest occupancy rate at 83%
- Porto will see the highest RevPAR growth at 14.8%
- Geneva will record the highest ADR at €300.2
Many European hotels are set to benefit from US visitors. Job creation in the US is expected to boost disposable income and a strong dollar will encourage US consumers to travel abroad.
Hotel supply is low, even with rising demand
New hotel growth remains low with less than 1% recorded in 2016. However there are some locations bucking the trend.
London, Istanbul, Berlin, and Moscow have the biggest development pipelines. Berlin will open 3,700 rooms in the next two years while London should see an increase of 8,000 in 2017 alone.
Budapest is in a creation phase as well with 2,600 rooms to be opened in 2017-18.
Key European cities continue to be popular with travellers:
Occupancy is expected to climb back up to 70% in Rome for the first time since the recent financial crisis that many said would cause the collapse of the Euro. RevPAR is also expected to grow by 1.1% this year.
The UK responded to Brexit better than expected. GDP will grow by 1.5% in 2017 and a weaker pound combined with the positive outlook for the Eurozone should benefit London’s economy.
2016 was a very strong year for Madrid when RevPAR increased by 7.2%. The Spanish economy is expected to thrive in the future, further pushing Madrid as a competitive business centre and proving favourable for hotels.