Luxury spending leads hotel sector recovery

Luxury spending leads hotel sector recovery

Luxury and business travel are leading the recovery of the European hotel sector, according to figures released today by American Express Business Insights.

American Express analysed levels of spending from its global customer base on hotels in the UK, Italy, Germany, France and Spain from before the downturn in 2007 to the first quarter of 2011. The figures revelaed that the European hotel industry is showing signs of growth, but spending has not yet returned to pre-recession levels.

Spending in five star hotels across Europe increased 9% year-on-year in 2010, while spending at four star and three star and below properties grew at 3% and 2% respectively. This could be partly attributed to the number of high profile luxury hotel openings in the last 12 months.

Sujata Bhatia, vice president of American Express Business Insights Europe and Asia, said: "This strong growth is great news in an environment where consumer confidence remains low and economic growth fragile."

Business travellers spent 10% more across Europe in 2010, with a further 4% growth in the first quarter of 2011. This reflected an increase in the number of travellers, rather than an increase in the amount spent.

The research also revealed that Generation Y Travellers, who are in their 20s, are an important emerging market. They are spending 20% more on hotels than they were before the downturn and, in the first three months of this year, they spent 24% more on hotels compared to the same period last year.

More than half stayed in a luxury or midscale hotel and their most popular destination choices were the UK, France and Italy.

"This is a fantastic segment that is willing to spend although they don't earn very much. Hotels have to use a dramatically different approach to attract them, such as using social media," said Bhatia.

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