A “robust” forecast for European travel is expected to drive hotel trading but revenue growth will remain weaker after an exceptional 2015, according to PwC’s latest European hotels forecast.
Record tourist arrivals last year propelled hotel performance for many European destinations.
City trips remain a top travel growth segment and strong demand and weak supply growth meant many hoteliers enjoyed a remarkable year in 2015 and will continue to do so in 2016.
The majority of cities included in the forecast, except Brussels and Milan, are expected to achieve revenue growth in 2016 and almost all cities should see additional growth in 2017 – with the exception of Geneva and Rome.
The top cities by revenue per available room (Revpar) growth, in local currency, are Rome (19.2%), followed by Dublin (9.1%) and Prague (6.6%), then Madrid (5.8%), Lisbon (5.7%), Porto (4.5%), Moscow (4%), Barcelona (3.3%) and Berlin (3.1%).
In 2017, in local currency, Dublin (8.2%) is forecast to top the revpar growth league, followed by Lisbon (6.9%), Porto (5.8%), Barcelona (5.5%), Prague (4.9%), Milan (4.1%), Moscow (3.9%), Madrid (3.8%) and Frankfurt (2.9%).
Growth is being driven by a combination of average daily rate (ADR) and occupancy growth.
Rome should see very high occupancy and ADR growth this year with the draw of the Holy Year propelling Rome’s revpar with an expected 25 million visitors and pilgrims, however, this creates difficult comparatives for 2017.
In many top performing cities like London, Dublin, Edinburgh or Amsterdam which operate at high occupancy levels, it is ADR driving the most growth, according to PwC.
Occupancies are forecast to be above 80% in three cities – London (82.9%), Dublin (82.3%) and Edinburgh (81.8%) – this year.
Edinburgh is set to overtake Dublin in 2017. The top three cities will be London (83.5%), Edinburgh (82.5%) and Dublin (82.4%).
Higher occupancy levels reflect a structural shift towards more branded budget hotels in some countries as well as access to online distribution channels combined with greater propensity to travel.
