Hotel occupancy and revenues should be driven this year by resilient European economies, continued popularity of Mediterranean destinations and Europe’s importance for business travellers, a new study predicts.
While security concerns saw mixed fortunes for some city destinations in 2016, overall it was another record year for European tourism with 12 million more visitors and a total of 2.8 billion nights spent in tourist accommodation, according to the latest PwC European Cities Hotel Forecast.
An influx of tourists from the US and a booming Asia should drive hotel trading in 2017, with the majority of key city destinations likely to see continued growth.
The majority of cities, with the exception of Geneva and Zurich, are expected to achieve revenue growth in 2017 and almost all cities should see additional growth in 2018.
Measured by revenue per available room (revpar), Porto tops the 2017 growth table with a 14.8% growth forecast, followed by Dublin (8.7%), Budapest (6.8%), Madrid (5.9%), Lisbon (5.6%), Prague (5.5), Barcelona (5.4%), Frankfurt (4.5%) and Paris (3.6%).
Looking to 2018, in local currency, Porto is forecast to maintain its double digit revenue growth at 12.8%, followed by Budapest (9.9%), Madrid (8.2%), Dublin (7.4%), Lisbon (6.8%), Paris (5.8%), Barcelona (5.2%), Berlin (3.1%) and Frankfurt (3%).
Growth is being driven by continued economic growth and travel demand with the UN World Tourism Organisation forecasting a 2%-3% rise in global tourism for 2017.
PwC head of hospitality and leisure research, Liz Hall, said: “Despite general elections across Europe this year the outlook for hotels in Europe is largely positive.
“Many destinations have invested in improving and promoting the quality of their tourism services and with tourism set to rise again this year, many of the cities can expect good growth.
“A strengthening dollar will make trips to Europe popular, with a weak pound making London in particular, even more attractive.
“However, this will be balanced by unprecedented geopolitical uncertainty and travellers’ security and safety concerns remain.”
Looking at the UK, Hall added: “The effects of a weaker pound were finally felt by hospitality businesses towards the end of 2016 with inbound holiday tourism soaring.
“Hotel revpar in London increased by 14.3% year-on-year in December which according to STR Global data is the biggest year-on-year growth since the 2012 Olympics. It was a challenging year until then.
“We expect inbound holiday growth to continue in 2017, as the capital provides improved value for money.
“Staycations from UK residents may also lift performance as some opt against going overseas as an expected squeeze on living standards begins to bite.
“Events such as the ICC Cricket Champions Trophy, the World Athletics and Para-Athletic Games will help demand in the capital with Cardiff set to benefit from hosting the UEFA Champions League final in June.”