European hotels on the up

London — Recent analysis by Deloitte has found that recovery in European hotel performance is on the horizon. Demand has experienced an upturn since October 2009, before pushing into positive territory in December 2009 - up 4.2 percent. STR Global results for January 2010 also show a healthy 3.3 percent increase in the region against January 2009.

Alex Kyriakidis, Global Managing Partner of Tourism Hospitality & Leisure at Deloitte, commenting on the results, said: “No strong rebound in European tourism and hotel performance is expected in 2010, but further declines will now be city specific rather than the norm. Demand should continue to return as more people travel to and within Europe. This will give hoteliers an opportunity to grow occupancy and then average room rates and revenue per available room (revPAR). However, it will be difficult to surpass pre-recessionary levels this year.

“Hotels in London however, are an exception. The capital had the advantage of an inexpensive currency compared to the US dollar and euro throughout the downturn along with limited new supply, and did not experience the massive drop off in tourism that some European cities did. Increases in leisure visits from international and domestic tourists counterbalanced a 20 percent drop in business travel. Combined with strong revenue management, London is leading European hotels out of the recession. Hoteliers there have been able to push up average room rates since November 2009 and could possibly achieve double-digit revPAR growth this year.

Marvin Rust, Global Managing Partner of Hospitality at Deloitte, commenting on the recovery, said: “As a general rule, hotel performance will be closely tied to trends in consumer confidence and GDP growth. With the US dollar strengthening further we could see a welcome return of the American tourists to the UK towards the back end of this year. This remains our most important source market and one that tends to spend well when they are here. On the other hand, corporate travel budgets continue to be scrutinized in cost cutting programs, and while some rebound will occur, demand will remain weaker than normal.”

Notes to editor:
All analysis in euro.
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