HOTEL INDUSTRY IN EUROPE
KEY TAKEAWAYS
- In 2022, Major industry leaders experienced Q2 REVPAR above the 2019 level due to significant improvement in business profit. The momentum is expected to continue throughout the year by the upcoming summer and the recovery of major seminars and conventions.
- Western Europe comprising Germany, France, Switzerland among others serves as an important destination for both domestic and International Tourism.
- Leisure Hotels is expected to lead the path to recovery for the European Hotel market in the coming period soon after vaccine roll-outs and easing of travel restrictions.
- Germany, France and the United Kingdom have become key destinations for Tourism market as it caters to domestic tourism demand in the nation.
- In June, July and August 2022, the bookings continue to show strong growth and there is no sign of any downside in the near months in hotel bookings.
- New phenomenon of flexible, time-based rental of office workplaces, which includes a community element has been emerging across Europe. As more and more business customers travel and use hotel rooms, lobbies, cafés and restaurants as places to hold meetings or concentrate on their work.
- As hotels ramp up their business, those benefiting from drive-to leisure demand are experiencing encouraging levels of performance. Some, especially those relying on international visitors, will take longer to see satisfactory levels of business return. There are many factors which will further influence travel and tourism in the Post Covid era in Europe
- The growth of some market leaders’ portfolios and the rise of some challengers marked the Europe Hotel chain supply’s resilience.
- The Whitbread Group registered a positive PAT margin in 2021, despite the almost decline of Business Travel in the nation and the brand continued its expansion into Germany.
OVERVIEW
With most international destinations to visit and strong recovery of domestic tourism, Europe is the most attractive destination across the word. Approximately 460 new hotels opened in Europe in 2021, with the number of hotel launches only expected to grow further in 2022.
Owing to its leading role in the global tourism market, the hospitality sector is one of the key drivers of the European economy, and European tourism, both in terms of employment as well as of direct contribution to revenue generation in the economy. Together with tourism, the hospitality sector is the 3rd largest socio-economic activity in Europe.
The hotel market in Europe has benefited from a prolonged economic boom in recent years. With developments in globalisation, digitalisation and urbanisation, however, increasing changes can be felt in the hotel industry. Accordingly, the hotel industry is currently facing numerous challenges with regard to customer and work behaviour, sales models and real estate.
For example, there is an increasing trend towards people working independently of particular locations (“footloose service sector industry”) and feeling at home in many places at the same time. Hotels will therefore play a new role in the future – they will become people’s homes away from home.
This means that the current trend is moving away from classic hotels and traditional hotel formats towards options that are more tailored to the needs of customers, beyond just somewhere to sleep for the night.
The hotel industry is increasingly forced to strike a balance between a place of recreation and a workplace. In addition, solutions must be developed that align the digital revolution with increasingly diverse human needs. Hotels that do not react adequately and quickly to changes in future trends will ultimately miss the boat.
However, the fundamentals of the European hotel industry remain strong: key hotel markets such as London, Paris, and Rome are generally supply constrained and continue to show significant demand growth both from within the continent and from overseas visitors.
As a result of these wider economic and tourism trends, the European hotel industry has seen demand-led RevPAR growth in 2019 and managed to maintain profitability levels despite pressure on margins through increasing wage costs.
HOTEL LAUNCHES IN 2021
| SI No | Company | Country | Headline | Rooms | Announcement |
| 1 | Hotel Palasa Beach
| Albania
| The new oceanfront property is slated to have 142 rooms and suites, plus five private villas. | 142 | 2021 |
| 2 | Sommerro
| Norway
| Slated to open in the Norwegian capital of Oslo in September 2022 and will feature stunning historic design (the building dates back the 1930s), as well as the city’s first rooftop pool and sauna. | 231 | 2022 |
| 3 | Lesante Cape
| Greece | With two existing properties in their portfolio, The Lesante Collection is launching a third, Lesante Cape, also on the Ionian island of Zakynthos, in May 2022. | 55 Suits and 10 villas | 2022 |
| Sl No. | Company | Country | Headline | Rooms | Announcement |
| 1 | Hyatt Place | UK | Hyatt Place London City East, the first Hyatt Place hotel in central London, has opened today. | 100 rooms | 28-Jun-21 |
| 2 | Radisson | Italy | Radisson Hotel Group has signed seven new hotels in tier one locations across Italy. The new properties include two premium lifestyle Radisson Collection hotels in Milan and Venice | – | 05-Jun- 21 |
| 3 | Rocco Forte Hotels | Italy | Rocco Forte Hotels has unveiled the newly restored Villa Igiea in Italy. | – | 07-Jun-21 |
| 4 | Ruby Luna | Germany | Ruby Hotels has launched its third Dusseldorf hotel, in Kasernenstrabe, Ruby Luna. | 206 rooms | 11-May-21 |
| 5 | Travelodge | UK | Travelodge has announced it expects to open 17 new hotels across the UK in 2021, growing its hotel network to 597 locations in the UK, Ireland and Spain. | 17 Hotels | 04-May-21 |
| 6 | Palace Hotel | Estonia | With a location at the entrance to the Old Town, Radisson Hotel Group has announced the opening of Palace Hotel Tallinn. | 79 rooms | 04-Apr-21 |
| 7 | Virgin Hotels | Scotland | Virgin Hotels has unveiled plans to open and operate a new hotel in Glasgow, Scotland. | 242 rooms | 01-Apr-21 |
| 8 | Radisson Blu Hotel | France | Radisson Blu Hotel, Rouen Centre has opened its doors to the first guests. Located centrally, the hotel will offer memorable guest experiences, state-of-the-art meeting rooms and a holistic wellness centre. | 93 rooms | 12-Mar-21 |
| 9 | Aloft Birmingham Eastside | UK | Aloft Hotels has made its debut in Birmingham with the opening of Aloft Birmingham Eastside. | 193 rooms | 08-Mar-21 |
| 10 | voco Hotels | Scotland | IHG Hotels & Resorts has launched the voco Hotels brand into the Scottish market. Marked with the upcoming opening of voco Grand Central in Glasgow and voco Edinburgh – Haymarket, the company is seeking to boost its place in the city break market. | 150 rooms | 01-Mar-21 |
The current unsteady hospitality market is the perfect time to combine shrewd, long-term investment with leisure and corporate guests’ requirements for hotel brands that prioritize a positive environmental impact.
UK Hotel transactions volumes exceeded £1.5 billion for Jan-Apr 2022 compared to an impressive £4 billion of UK hotel transactions in 2021, emphasising the growing investor sentiment and optimism over the long-term prospects for the sector. The underlying drivers of increased hotel demand, the continued improvement in profitability and visibility for future trading, have all contributed to the improved sentiment towards the sector.
Europe’s largest hotel operator Accor entered negotiation to sell 10.8% stake in Ennismore, a global collection of leading lifestyle hospitality brands, to a Qatari consortium, for a total amount of €185 million.This deal is expected to close H2 2022.
Mandarin Oriental Hotel Group is planning to expand its branches in France, Barcelona and Greece.
Germany and the UK account for nearly 60% of pipeline rooms currently under construction and are expected to absorb additional supply in the medium term due to strong tourism growth forecasts.Hotel construction continues in Europe despite the pandemic, with investors looking to Germany to set the tone for the rest of the continent,
HOTEL INDUSTRY IN EUROPE MARKET SIZE AND FORECAST
Hotel industry in Europe’s market size was estimated at ~EUR 21.9 Billion in 2022. As compared with 2020, revenues increased by ~9.20% in 2021 YOY but the market will also see a steep recovery in 2022 led by domestic and leisure tourism. It is only By 2024, that the market will be able to reach pre-covid levels of around ~EUR 32.1 Billion
The Chained Hotel industry in Europe market size is expected to grow at ~15.16% CAGR between 2022-2027. The demand from domestic travellers in the short term and luxury hotel segment led by leisure trips holds higher growth potential.
HOTEL INDUSTRY IN EUROPE MARKET SEGMENTATION
BY HOTEL TYPE
- Business Hotels
- Leisure Hotels
- Miscellaneous Hotels
BY REGION
- North Europe
- South Europe
- East Europe
- West Europe
BY COUNTRY
- United Kingdom
- Germany
- France
- Italy
- Poland
- Spain
- Denmark
- Switzerland
- Russia
- Greece
- Others
HOTEL INDUSTRY IN EUROPE MARKET DYNAMICS
The hotel industry is increasingly forced to strike a balance between a place of recreation and a workplace. In addition, solutions must be developed that align the digital revolution with increasingly diverse human needs. Hotels that do not react adequately and quickly to changes in future trends will ultimately miss the boat.
However, the fundamentals of the European hotel industry remain strong: key hotel markets such as London, Paris, and Rome are generally supply constrained and continue to show significant demand growth both from within the continent and from overseas visitors.
Much quicker reopening of hotels especially in high demand bases like that of Germany, United Kingdom, Spain. Cross-border demand has begun to return, propelled largely by drive-to and rail-connected intraregional movement.
GROWTH IN REVENUE
Even Hotel industry revenue will grow by approx ~15% in 2022, but still it will remain down by almost ~30% compared to 2019.
As one indicator of hotel demand growth, the EU average is raised by the growth of Eastern European countries such as Poland, Hungary, and Romania, while Western Europe is expecting milder growth in the tourism sector.
The post-pandemic recovery of the European travel and tourism industry could be put at serious risk if almost 1.2 million jobs remain unfilled across the EU. And the current shortages of labour can delay this trend and put additional pressure on an already embattled sector.
As a result of the decade-long low interest rate environment in Europe, institutional investors searching for yield have continued to show increasing interest in European hotels since 2019.
Total investment volume for the first four months of 2022 is already some 40% ahead of H1-2021. Transactional activity has been relatively evenly split, with London securing approximately £750 million of investment, whilst regional UK achieved over £800m of hotel transactions.
With European income growth outpacing inflation, the increase in purchasing power combined with the continued growth of inbound visitation are likely to support continued demand growth for hotels in the near term.
RISING NUMBER OF TOURISTS
After 2 years of major pandemic disruption, the hotel industry business rebounded sharply in H1 2022. This rebound resulted due to an increased number of business and leisure domestic guests and borders reopening for international tourists too.
The European travel market is expected to be driven by leisure travelers at least for the mid-term due to the pent-up demand of 2021.Western Europe comprising Germany, France, and Switzerland among others serves as an important destination for both domestic and International Tourism.
International tourist arrivals recovered strongly in 2022, but these levels are still below compared to 2019 by an average of 36%. The arrivals in the European region registered 280% growth in Q1 2022 over Q1 2021. Reduction in Covid-related restrictions and recovery in pent-up demand for Europe destinations accelerated the international tourist arrival in Europe and is expected to continue in the remaining months of 2022.
Home to world-famous spots and host to notable international events, France is the leading European travel destination for international tourists. The capital city, Paris, attracted over 16.8 million international sightseers every year.
IMPACT OF VACCINATION
European travel activity is set to build some momentum moving into the peak summer months due to the gradual easing of restrictions, the ramp-up in vaccinations, and the EU’s recent reopening to more third countries and fully vaccinated travellers from abroad.
Many EU member states have removed requirements for travelers to present proof of a vaccination certificate. However, this measure could be reapplied if concerns arise over COVID-19 infection rates.
European Technical Advisory Group of Experts on Immunization (ETAGE) has advised Member States to intensify efforts to ensure that all eligible people are up to date with their COVID-19 vaccinations in line with national COVID-19 vaccination policies for the primary series and first booster dose
As hotels ramp up their business, those benefiting from drive-to leisure demand are experiencing encouraging levels of performance. Some, especially those relying on international visitors, will take longer to see satisfactory levels of business return. There are many factors which will further influence travel and tourism in the Post Covid era in Europe
THE WAY FORWARD
As hotels ramp up their business, those benefiting from drive-to leisure demand are experiencing encouraging levels of performance. Some, especially those relying on international visitors, will take longer to see Pre- Covid levels of business return, with those reliant on MICE business taking longer still.
A vaccine will help to accelerate some of this growth but, in any event, it is certain that the hotel sector will eventually produce strong returns again and remain attractive to investors who recognize their longer-term earnings potential.
The sharing economy megatrend, here in the form of co-working, is one of the major market opportunities for the hotel industry. The flexible office space market is booming across Europe, and hotel operators are already capitalising on it.
For Micro hotels, which are also referred as Boutique Hotels, investment is seen rising in 2022. These hotels are smaller in size with 10-100 rooms but come with an unequalled level of hospitality and an original array of aesthetics that adds to the flavorful atmosphere.
Transforming hotel lobbies into communal workspaces is an innovative way for hotel brands to maximize the earning potential of real estate assets, in turn strengthening their brand amongst guests and the wider community.
More and more business people travel and use hotel rooms, lobbies, cafés and restaurants as places to hold meetings or concentrate on their work. The still relatively new phenomenon of flexible, time-based rental of office workplaces, which includes a community element, has become increasingly commonplace in recent years.
In the future, the demand for co-working spaces and work-from-hotel trends is expected to bring about major changes in the hotel industry and foster its quick recovery in times of uncertainty.
COMPETITIVE ANALYSIS
| SI No | Timeline | Company | Developments |
| 1 | February 2022 | Perial Asset Management
| Covivio has sold the Club Med Grand Massif in Samoëns, France for €125 million to Perial Asset Management |
| 2 | February 2022 | LyvInn | Blantyre Capital Limited has agreed to acquire a 164-room hotel in Frankfurt to be operated under the LyvInn brand. No purchase price was given for the transaction. |
| 4 | February 2022 | Mutualidad de la Abogacía | Mutualidad de la Abogacía has sold three holiday hotels to the investor Plusell Blis for a total of 62.5 million euros |
The hotel industry in Europe is highly fragmented with many International chains as well as regional players under one roof. However, with just five players accounting for almost ~50% market share in 2021. The growth of the leaders’ portfolios and the rise of some challengers marked the chain supply’s resilience.
Whitbread and Scandic Hotels are the most popular operators in 2021 with a very wide presence. Marriott, Accor and Hilton hotels are scaling up rapidly post COVID-19. Whitbread Hotels registered a positive profit margin, irrespective of the decline in business travel.
Europe hosts a number of key market players which dominate the market scenario. In recent years, New entrants like Airbnb have also done well and managed to stand at par with these mega hotel chains owing to its preferred pricing strategies and easability.
Diverse sources of core and core-plus capital are increasingly considering investment in the hotel market. Private equity groups and other yield-driven investors face more competition from investors with a lower cost of capital and are expected to continue to move into secondary markets such as Portugal and Italy.
COMPANY PROFILES
- Marriott International
- Choice Hotels International
- Hilton Worldwide
- G6 Hospitality LLC
- Extended Stay America
- Wyndham Hotels & Resorts
- InterContinental Hotels Group
- AccorHotels
- Hyatt Hotels Corporation
- Best Western
THIS REPORT WILL ANSWER FOLLOWING QUESTIONS
- Complete Ongoing Hotel Project List in Europe 2022
- Project List in Design and Planning stage for 2022-2027
- Present Hotel Market 2022 -2027 (Revenue, Occupancy)
- New Hotel Group Entering Europe
- Impact of AirBnB on Hotel industry in Europe
- Market share of major companies
