Worries exist in Europe, but overall the hotel industry picture looks good for 2016 with inbound investment, consolidation, increased demand and low commodity prices topping the list.
Hotel industry analysts are optimistic for positive European hotel performance in 2016 that will continue next year, despite worrying trends that could indicate the contrary.
“I’m quite bullish about our sector in Europe for the next year or two,” said Robin Rossmann, managing director of STR Global, at the Deloitte Trading & Investment Briefing held Wednesday in London.
Rossmann added that while the lowered cost of commodities has translated into more European purchasing power, increased talk of geopolitical and Eurozone strife might turn speculation of declining growth into a self-fulfilling prophecy.
“2016 has started with a lot of negative news flow, but we in the hospitality business tend to be a pretty optimistic bunch,” said Nick van Marken, global head of Deloitte’s travel, hospitality and leisure department.
Helping the overall picture is guest demand, which continues to show robustness, and European hoteliers have kept a sharp eye on costs and savings, sources said.
While the United States is showing healthy economic indicators, its investors have started to get a little nervous of late, sources said.
Rossmann and fellow presenter Nikola Reid, senior manager of Deloitte’s travel, hospitality and leisure, said that much European investment would come from American investors, who were taking a less positive view about the rate of hotel industry growth in the United States.
“We’ve seen (real-estate-investment-trust) share prices decline 50% year to date,” Rossmann said.
Rossmann also said recent numbers showed that for the first time since 2008 to 2011 Europe had surpassed the U.S. in terms of RevPar growth (see chart below).
“The last time that happened was in 2008, so maybe that is not the good news it seems,” Rossmann said.
That RevPAR growth, Rossmann said, translated into percentage gains across the continent, with Switzerland as the exception.