The WPJ
Vacation Real Estate News
Europe's Hotel Market Thaws
(LONDON, UK) -- According to STR Global, the current year for the European hotel sector is likely to be one of recovery rather than growth.
"With a return to RevPAR growth last December, European hoteliers can look forward to some improvement in market conditions this year provided overall economic circumstances do not further deteriorate", said Elizabeth Randall, managing director of STR Global. As seen in the table below, positive change in year-on-year occupancy is the main reason for the improving position of revenue per available room (RevPAR) in Europe.
European hotel performance (Percentage change December 2009 from December 2008, euros)
"This news must be mitigated by the fact that comparisons are with very poor performances in the last quarter of 2008," Randall explains, "but with demand beginning to trend upwards and supply holding steady there is room for cautious optimism."
Occupied rooms, or demand, had begun to decline well before the financial crisis triggered by the collapse of Lehmann Brothers in September 2008 as the graph below illustrates. On the other hand, the change in the supply of total available rooms in Europe per STR Global's Census database is flat. STR Global's Pipeline Reports show that expected new hotel rooms to enter the market in the coming years represents only 1.4 percent of existing stock. Compare this to 9.8 percent in the Middle East/Africa region or 7.3 percent in the USA and Europe's position starts to look more favorable.
12-month moving average percentage Change in Demand (occupied rooms) & Supply (available rooms)
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