LONDON, May 9, 2011-The European
hotel industry is showing steady signs of growth, although it is yet to
recover to pre-downturn levels, according to data released today by
American Express Business Insights, the data analytics and consulting
arm of American Express.
Overall hotel spending in Europe grew 7 percent in 2010, with a further
4 percent growth in the first quarter of this year. Growth has been
driven by tourists from outside of Europe returning to the region,
increased spending in luxury hotels and a rebound in business travel.
Generation Y travellers, those in their 20s, have proven to be
particularly resilient. They largely defied the downturn and are
showing a clear appetite for luxury spending.
The insights, presented today at a gathering of senior executives in
the hospitality industry in London, provide an in-depth look into the
state of the hotel sector across the major European markets. Spending
was analysed for the UK, Italy, Germany, France and Spain, from before
the downturn in 2007 to the end of the first quarter in 2011.
The UK hotel sector led spending growth in Europe in 2010, growing at a
healthy 10 percent, followed by France (7 percent) and Germany (4
percent). None of the markets has returned to pre-downturn levels.
However, the UK, France and Germany are almost back to 2008 spending
levels. While Spain (8 percent) and Italy (4 percent) also grew in
2010, they were hit harder by the downturn and have further to go
before they recover to 2008 levels.
Sujata Bhatia, Vice President for American Express Business Insights
Europe and Asia, explains that a rebound is taking place in the hotel
sector across Europe. "Visitors to Europe drove double digit
year-on-year growth in 2010 and business travel grew by 10 percent
across the region over the same period. Furthermore, we saw spending
growth amongst luxury leisure travellers increase by 9 percent across
Europe in 2010."
"This strong growth is great news in an environment where consumer
confidence remains low and economic growth fragile," said Bhatia. "This
is particularly true in the UK, where international visitors are
spending again, making a significant contribution to the UK's economic
recovery. It will be interesting to see how heightened global interest
in the UK, with the Royal wedding, Queen's Diamond Jubilee and the 2012
Olympics, impacts the sector."
KEY FINDINGS
After a large drop off, tourists from outside Europe return
The analysis found that visitors to Europe are an important driver of
the recovery - in short, tourists are back. Representing one-third of
all leisure travellers, spending by non-European tourists declined more
sharply than European travellers, but their rebound has been
impressive. Visitors from outside the region drove double-digit growth
in spending across every market in 2010 compared to 2009, taking them
back to 2008 absolute spending levels. On average they spend 88 percent
more per trip than European tourists.
Italy saw the greatest growth from non-Europeans (15 percent), followed
by Spain (14 percent) and France (13 percent). The UK and Germany grew
at a slightly slower rate of 12 percent. In comparison, the overall
growth in spending by European tourists was only 1 percent in 2010.
In the first quarter of this year, overall growth in spending by
non-European tourists remained strong at 12 percent. In the UK it was 9
percent, a promising sign for the peak summer season. There was no
growth in spending by European travellers in the same period.
In 2010 the most popular holiday destinations for European and
non-Europeans alike was France, followed by the UK. Interestingly,
France overtook the UK to become the most popular holiday destination
in 2009.
Luxury is back in a big way
In a positive sign for the European economy, there has been significant
growth in spending at luxury (5 star) hotels. On average, spending at
luxury hotels grew by 9 percent across all markets in 2010, while
spending at upscale (4 star) and midscale (3 star and below) hotels
only grew at 3 percent and 2 percent respectively. In the UK, both
luxury (10 percent) and midscale (7 percent) are seeing strong growth.
One reason for the growth in the luxury category is likely to be the
number of high-profile new luxury hotels which opened in Europe over
the past 12 months.
Business travel increases across
Europe
The importance of business spending to the sector can't be
underestimated. Business travellers currently represent one third of
all travellers across Europe and almost 50 percent of travellers in
Germany. In 2010 spending by business travellers increased by 10
percent across Europe, with a further 4 percent growth in the first
quarter of this year. This was largely driven by an increase in the
number of travellers, rather than an increase in average spending.
"While not yet back to pre-downturn levels, business spending in hotels
dropped off more slowly and rebounded more quickly, showing how vital
business travellers are to the hotel industry," noted Bhatia. "We are
watching with interest to see if the virtual management strategies
adopted in the downturn will have a lasting impact on business travel."
Generation Y has a taste for
luxury
Generation Y travellers (those in their 20s) represent an interesting
emerging target market for hoteliers, says Bhatia. "While the Gen Y
traveller represents a relatively small segment, they largely defied
the downturn, their wallets are growing and they already exhibit the
behaviour of premium spenders."
Generation Y travellers are spending 20 percent more on lodging today
than they were before the downturn and, in the first three months of
this year, they spent 24 percent more on hotels compared to the same
period last year. More than half of Generation Y travellers stayed in a
luxury or midscale hotel. Their most popular destination choices were
the UK, France, and Italy.
About American Express Business
Insights
As part of the Global Merchant Services organisation within American
Express Company, American Express Business Insights provides in-depth,
actionable insights into consumer and business spending at the
business, industry and geographic levels, leveraging proprietary
transaction data from the American Express network of approximately 90
million cards in force across over 125 markets.
About Sujata Bhatia
Sujata Bhatia is the vice president for American Express Business
Insights Europe and Asia. Sujata comes from a business and finance
background. A Certified Public Accountant, she worked at Ernst &
Young, Goldman Sachs and Bain & Co ahead of joining American
Express in 2004.
Source: American Express Business Insights