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Europe Likely To See Recovery, Not Growth

Europe Likely To See Recovery, Not Growth

The current year for the Europe hotel trade is likely to be one of recovery rather than growth, predicts STR Global.

“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. Positive change in year-on-year occupancy is the main reason for the improving position of RevPAR in Europe.

“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% of existing stock. Compare this to 9.8% in the Middle East/Africa region or 7.3% in the USA and Europe’s position starts to look more favourable.