An improving Eurozone economic outlook and strong demand from international tourists is set to boost hotel trading across most cities in 2018, according to a new forecast.
Growth is being driven by a robust Eurozone economy and travel demand with the UN World Tourism Organisation forecasting a 4%-5% growth in global tourism this year.
PwC’s seventh Euro Cities Hotel Forecast says Europe welcomed 671 million overnight visitors in 2017, with international tourism arrivals delivering 8% year-on-year growth.
Analysis of the prospects for the hotel sector in 12 national or regional capital cities for 2018-19 found that the majority, except Frankfurt and Zurich, should achieve revenue growth in 2018, with all cities expected to see further increases in 2019.
Measured by revenue per available room (revpar) Porto tops the city growth table in 2018 with 10.3% growth forecast followed by Amsterdam (7.1%), Lisbon (7%), Prague (6.8%), Milan (3.9%), Paris (3.6%), Geneva (2%), Rome (1.8%), Berlin (1.3%) and London (0.6%).
Looking to 2019 and measured in local currency, Lisbon (6.5%) and Paris (6.4%) lead the growth followed by Porto (5.2%), Frankfurt (4.3%), Amsterdam (3.5%), Prague (3.4%), Milan (2.6%), Berlin (2%) and London (1.9%).
PwC head of hospitality and leisure research Liz Hall said: “Continuing global and regional economic recovery should continue to support strong leisure and business demand for travel and hotels.
“2017 was a record year for travel and we remain cautiously optimistic and forecast further revpar growth in most of the cities analysed. With occupancies already high, we expect average daily rate gains to drive much of this growth.
“Events also remain a key catalyst for hotel trading with some large fairs and events taking place over the forecast period in London, Frankfurt, Paris and Amsterdam and expected to attract large numbers of visitors.”
She added: “European cities will be looking to capitalise on Brexit. With the European Banking Agency preparing to relocate and the European Medicines Agency generating around 36,000 nights a year, other cities will hope to benefit from corporate relocations out of London.”
London and Amsterdam hotels are forecast to to have the highest occupancies of 82% in 2018 despite high supply additions. Prague (81%) is close behind with Lisbon (78%), Berlin (77%) and Porto (77%) all with occupancies in the high 70s.
In 2019 Prague joins London to have the joint highest occupancies (82%) with Amsterdam next (81%) followed by Lisbon (79%). Paris is forecast to be the big mover, overtaking Porto and Berlin.
The most expensive city this year is currently Geneva (€242) followed by Paris (€236), Zurich (€197), London (€162) and Amsterdam (€152).
Prague (€93) is the most economical, followed by Berlin (€96) and Porto (€101).
All cities should see further average daily rate growth next year with Lisbon (€128) overtaking Frankfurt (€125).
Paris is forecast to top the revpar rankings in both 2018 (€176) and 2019 (€188). Geneva (€170) is second place followed by Zurich (€143), London (€133) and Amsterdam (€124). The revparb for Paris hotels remains around €100 higher than Berlin, Prague and Porto at the other end of the table.
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