The European hotel industry is showing steady signs of growth, although it is yet to recover to pre-downturn levels, according to data released today by American Express Business Insights, the data analytics and consulting arm of American Express.

Overall hotel spending in Europe grew 7 percent in 2010, with a further 4 percent growth in the first quarter of this year. Growth has been driven by tourists from outside of Europe returning to the region, increased spending in luxury hotels and a rebound in business travel. Generation Y travellers, those in their 20s, have proven to be particularly resilient. They largely defied the downturn and are showing a clear appetite for luxury spending.

The insights, presented today at a gathering of senior executives in the hospitality industry in London, provide an in-depth look into the state of the hotel sector across the major European markets. Spending was analysed for the UK, Italy, Germany, France and Spain, from before the downturn in 2007 to the end of the first quarter in 2011.

The UK hotel sector led spending growth in Europe in 2010, growing at a healthy 10 percent, followed by France (7 percent) and Germany (4 percent). None of the markets has returned to pre-downturn levels. However, the UK, France and Germany are almost back to 2008 spending levels. While Spain (8 percent) and Italy (4 percent) also grew in 2010, they were hit harder by the downturn and have further to go before they recover to 2008 levels.

Sujata Bhatia, Vice President for American Express Business Insights Europe and Asia, explains that a rebound is taking place in the hotel sector across Europe. “Visitors to Europe drove double digit year-on-year growth in 2010 and business travel grew by 10 percent across the region over the same period. Furthermore, we saw spending growth amongst luxury leisure travellers increase by 9 percent across Europe in 2010.”

“This strong growth is great news in an environment where consumer confidence remains low and economic growth fragile,” said Bhatia. “This is particularly true in the UK, where international visitors are spending again, making a significant contribution to the UK’s economic recovery. It will be interesting to see how heightened global interest in the UK, with the Royal wedding, Queen’s Diamond Jubilee and the 2012 Olympics, impacts the sector.”