Over the summer months in Europe (June-August), Lisbon, Madrid and Barcelona all reported double-digit increases in terms of average daily rate or ADR. In Eastern Europe, Kiev, Bucharest, Warsaw and Budapest have all benefited from tourism growth. Meanwhile, growth in some destinations has meant recovery from a weak 2016. Istanbul and Brussels have both seen notable year-over-year performance increases this year, both coming back from sharp declines in 2016 due to security concerns after multiple terror attacks.

European cities post double-digit ADR growth

London Focus

UK hotels saw a sharp performance uptick in November 2016, following what had been a relatively flat year. This strong performance has continued into 2017, with London in particular benefiting from a surge in international tourism as a result of the weakened sterling. As of July, inbound arrivals were up 8% compared with the first seven months of 2016, according to VisitBritain.

 

The capital has posted sharp increases in both occupancy levels and ADR this year, experiencing double-digit growth in RevPAR (revenue per available room) in Q1, although this was in comparison with a fairly weak 2016. The market has seen substantial performance growth following the Brexit referendum last June or, more precisely, the pound’s devaluation in the immediate aftermath of the vote. Up to October, London’s 2016 hotel performance was relatively flat. Things rapidly turned a corner in November, when demand shot up 8 percent compared with the same month the year before. This carried through December (+9 percent) and January (+8 percent), with occupancy levels and rates soaring throughout this year to date.

 

London continues to eclipse its 2016 performance levels and should finish the year with a record-breaking RevPAR level. This year to date as of September, occupancy is up 1.3 percent to an actual level of 81.7 percent and ADR is up 5.2 percent to GBP 148.42, with RevPAR up 6.5 percent at GBP 121.29. Although supply continues to grow and put pressure on the market’s occupancy levels in the short term, demand remains quite high for London. Another validation of the market’s resilience, unfortunately, is that there have been no evident impacts from the terror attacks in March and June. Apart from fluctuating occupancy drops in the days following each attack, London hotels continued experiencing high performance growth.

 

With the current exchange rate, travel to the UK is slightly more expensive for American visitors than it was this time a year ago, although still a great deal more affordable than it was prior to the Brexit vote. Despite uncertainty still surrounding UK politics, London’s consistent hotel performance this year in the face of current supply developments and security concerns paints an encouraging picture for the future.

 

Barcelona Focus

Barcelona experienced substantial performance declines following the October 1 Catalan independence referendum. RevPAR dropped considerably during the first five days after the referendum, with the sharpest year-over-year decline (-27.5 percent) on October 4.

 

Prior to October, the market’s hotel performance was strong despite the August 18 terror attack and ongoing protests leading up to the referendum. Barcelona posted its highest-ever RevPAR level for the months of August (EUR 146.11) and September (EUR 140.75), experiencing double-digit increases compared with the same periods in 2016. Occupancy levels dropped for six of the seven days following the August 18 attack, but quickly recovered beginning on August 26. August hotel performance was lifted substantially by the ESC Congress (August 26-30), the world’s largest cardiovascular congress, which typically hosts around 30,000 attendees.

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