Europe’s hotel industry is selling more rooms than ever, with the shock of the pandemic firmly in the rear view mirror. According to data from STR, global hotel room demand has been ahead of 2019 levels, for the last 24 months consecutively.
For many in the hotel space, that ongoing improvement in demand has fed through to increases in occupancy. Thomas Emanuel, Senior Director at STR, presented a data summary of the market around the world at the Pandox Q4 results presentation. He noted that the data shows a 2% improvement in average occupancy in Australasia for 2024, taking it to 71%. Europe too saw a 2% uplift, to 70%.
Occupancy improving
Other regions enjoying an improvement in average occupancy were Asia (excluding China), the Middle East, Central America, South America and Northern Africa. The softest performance was in mainland China, where average occupancy fell 2% to 65%, and in sub-Saharan Africa, down 2% to 58%.
There was also, overall, good news on hotel room rates, said Emanuel. “With the exception of Mainland China, which obviously has a range of economic challenges, all other regions grew ADR. In Europe, we had a pretty solid year, up 4%, once again way ahead of our friends across the pond in North America.”
Looking ahead, Emanuel said a big issue for the hotel sector is bifurcation – an issue that many need to be wary of. “The industry is going in two separate ways in many respects.” The higher the class of hotel, it appears the stronger the potential to push up prices. In 2024, luxury hotels in Europe managed to drive up revpar by 8.1%, according to STR data. But for those operating hotels at the economy end of the market, there was less of an opportunity to push up prices, as squeezed consumers reacted: revpar was up just 0.4% in this segment, as modestly higher room rates were largely offset by softer occupancy.
Eastern hotels performed better
During 2024, city hotels largely traded well, albeit those to the east of Europe faired more strongly. STR data shows Tallinn, Helsinki, Riga and Vilnius hotels all enjoyed occupancy up at least 5% on the previous year. In contrast, London, Amsterdam, Roe, Zurich, Brussels and Zurich were up just 1%, while Milan and Dublin were flat and the metric declined in Barcelona and Paris.
New hotel supply remains generally moderate, said Emanuel. “If we look at things on a country level, on an industry level, I think it’s safe to say that we are not really going to see supply being an issue in terms of performance. And that, of course, is of great benefit to existing hotels, but also those hotels that do open their doors.” Pipeline sizes are, generally, relative to the scale of country markets, with the UK having a pipeline of 96,000 rooms, Germany at 74,000 and Spain expecting 33,000 new rooms.
