Outlook Strong for Europe's Hotels but With Challenges Ahead for Some
By Magalí Castells Senior Association, HVS London | June 09, 2019
There is no doubt that people are still travelling, and more so than ever. Europe consistently maintains an impressive 50% share of global tourist movements, receiving 713 million visitors last year, a 6% increase on 2017.
As a result the European hotels market remains strong, both in terms of the buying and selling of hotels in the region as well as the demand for rooms. With some exceptions, last year was generally a profitable one for hotels, with most properties experiencing a solid rise in RevPAR performance - an aggregate increase in euro terms of around 5%.
But the detail paints a slightly different picture, with some markets in growth while others are suffering from influences such as the impact of supply increase or ongoing geopolitical tensions. Each year global hotel consultancy HVS looks at the trends in the European hotel market in two ways: firstly, by indexing the changes in hotel values across the region; and secondly by recording and analyzing transaction levels. Changes in hotel values are based on hotel performance, which reflect the success of a particular market in attracting both business and leisure guests. Transaction levels demonstrate investors' longer-term view of the market. Together these two reports give a unique picture of the health of the European hotel sector.
Top Performing European Markets
Out of the 33 hotel markets analysed by HVS in its recently published annual European Hotel Valuation Index (HVI) based on hotel operating data, only six markets across Europe saw a value drop. This was a strong result considering the geopolitical uncertainty and economic slowdown in some parts of Europe, suggesting that the influence of such issues on hotel investors, developers and lenders seems to be lessening.
In 2017 European hotel values registered an impressive 3.9% growth on the previous year, and this positive trend continued throughout 2018 with values growing by an additional 3%. Despite this last year's increases were somewhat more modest than the year before, with none of the bottom or top performing markets reaching double figures in terms of value change.