European cities hotels report and release

Waving the recession goodbye

European cities hotel forecast for 2011 - 2o12

New research by PwC on the hotels market across 17 European cities shows that, despite the unsettled times, the European sector remains resilient.

Europe has the biggest hotel and travel market in the world but its cities and hotel markets are undergoing change as they are buffeted by new economic, social, technological, environmental and political currents.

Different themes play out across the 17 cities (Amsterdam, Barcelona, Belfast, Berlin, Dublin, Edinburgh, Frankfurt, Geneva, Istanbul, London, Madrid, Moscow, Paris, Rome, Stockholm, Vienna and Zurich) as each city has its own unique characteristics, but most have bounced back from the downturn of 2008 and 2009 when some saw declines in RevPAR of 20 per cent or more.

Robert Milburn, UK Hospitality & Leisure leader said:

"Many of the cities we looked at have, hopefully, seen the worst of the recession. Some, like London, Paris, and Amsterdam, stand out from the crowd and have shown the strongest recovery so far. But looking to the end of 2011, we expect Istanbul will lead the top ten cities as far as RevPAR growth is concerned, followed by Dublin, Amsterdam and Barcelona. London, despite its strong recovery in 2010, will only see RevPAR growth of 8.1 per cent in 2011, placing it sixth in our ranking."

The 2011 cities forecast

% change on previous year (ranked by RevPAR % growth)

Occupancy ADR RevPAR

1. Istanbul-1.8%21.7%19.5%
2. Dublin6.1%5.7%12.1%
3. Amsterdam4.2%7.0%11.5%
4. Barcelona8.5%1.7%10.4%
5. Rome3.7%5.5%9.4%
6. London-0.8%8.9%8.1*%
7. Paris-1.0%7.5%6.4%
8. Vienna1.7%4.5%6.3%
9. Stockholm1.8%3.7%5.6%
10. Edinburgh3.9%1.1%5.1%

2012 and beyond

Despite the continuing economic uncertainty, the road ahead still looks positive for many of the cities we have analysed. But rates of growth are slowing and double digit RevPAR growth will elude most of the cities in 2012.

Stockholm is the only city which will manage double figure RevPAR growth, reflecting the Swedish economy's strong recovery from recession. Cities such as Istanbul (after a storming 2011), Zurich and Frankfurt will see RevPAR growth of less than 2 per cent.

Business travel is key to delivering growth in the sector and the austerity measures put in place by both companies and Governments is a real concern for the industry. Even London's hosting of the Olympics in 2012 won't significantly improve RevPAR for its hotels, although a strong third quarter when the Olympics are in town should help RevPAR for the year climb by 8.3%. This more muted performance than many have been expecting, reflects the fact that London's hotels are already close to full and the extra demand from the Olympics will be absorbed by the many new hotels which are opening this year and next.

The 2012 cities forecast

% change on previous year (ranked by RevPAR % growth)

Occupancy ADR RevPAR

1. Stockholm8.6%9.5%17.3%
2. London1.7%5.7%8.3%
3. Amsterdam2.0%4.4%6.5%
4. Madrid3.2%2.3%5.6%
5. Moscow2.5%3.0%5.6%
7. Berlin1.4%3.6%5.0%
8. Geneva2.4%0.9%3.3%
9. Paris0.6%1.9%2.6%
10. Barcelona1.1%1.3%2.4%

Added Milburn:

"Even though there's still uncertainty around the overall economic outlook, and growth rates are slowing, for the cities we looked at the future for the hotels sector generally looks positive."


Notes to Editor:

· To download a copy of the report "Best placed to grow - European cities hotel forecast" go to http://www.pwc.com/hospitality

· Revenue per available room (RevPAR) is a key performance metric for the hotel industry. Also knows as yield, it can be calculated by multiplying the average achieved room rate by the average annual room occupancy rate.

· ADR - Average Daily Room Rate

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