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European Hospitality Results for 2011 Lie Somewhere Between
Satisfaction and a Question Mark

European Union Averaged 5.5% RevPAR Growth

February 1, 2012 - 2011 closes with positive indicators for hotel business throughout the European Union, with an average of 5.5% growth in the RevPAR as a result of increased occupancy combined with growth in average daily rates. Yet, the dynamic that was seen until Spring 2011 slowed in the last quarter, ending with the start of decline last December. Europe is facing the challenge of renewing its hotel supply and of taking back control over distribution by the hotel operators. Europe is facing the challenge of renewing its hotel supply and of taking back control over distribution by the hotel operators.

It is important to observe that for the 27 countries in the European Union, the results of the hotel business for 2011 are positive. No country closed the year with a downturn for its reference indicator (the RevPAR) even if there is a broad range between stabilization in Sweden (+1.8%) and strong improvement in Poland (+9.3%), which occasionally benefited from its presidency of the Union. The European countries with the strongest hotel activity (United Kingdom, France, Germany or the Benelux) are positioned within a tighter range: between 4.5% and 6% growth, which better reflects the state of Europe’s marketplace.

With an average European occupancy rate higher than 66%, hotel occupancy gained two points over 2010, which was already in a strong recovery after the crisis of 2009. The leaders are the international gateways, capitals and business cities: Amsterdam, Berlin, Hamburg, London, Munich or Paris, which flirt with or surpass an OR of 75% across the year. With an OR close to 85% London beats all records, and is close to saturation, stimulating the whole of UK’s performance with 75%. At the bottom of the table is the OR in Italy, Spain and Poland which reflect the difficulties of the national markets. The only two drops in occupancy with respect to 2010 (Sweden and Austria) are less than 1.5 point.

This strong demand justified a significant improvement in the average daily rate (over 2.5% for the whole of Europe), with higher performances, around 6%, in Austria and Portugal. Generally speaking, it is the good results in upscale hotels that have allowed this progression.

The question mark bears on the slump observed in year-end business. The downturn of growth in the RevPAR since autumn 2011 was not brought to a halt by Christmas celebrations and the level of business in December 2011 dropped back below that of December 2010. While marginal, this drop in the RevPAR by 0.9% brings to a close nearly two years of positive change after the severe shakeup in 2009.

Globally in Europe the two business indexes came to a halt in their uptrend and it may be feared that the negative result of December 2011 will continue in the early months of 2012.

However, not all of Europe has swung as a whole into the red, and contrasting situations persist in two countries with a strong hotel capacity –France and Germany– where the RevPAR continues to progress slightly but at a rate slower than that at the beginning of 2011. In the same way, Central European countries are also progressing, particularly Poland, the Czech Republic, Austria and Hungary, but at relatively low performance levels.

Highly dependent on international clientele, the Benelux countries, as well as the United Kingdom, already posted negative growth since last November, entering the downturn a bit earlier, particularly thanks to a significant drop in average daily rates. The capitals resisted better, especially London, but the weight of the other regions, which were hit hard by the effects of the financial crisis, has a strong impact on national results. Countries in southern Europe, which also prematurely sank into the debt crisis of the different states, were impacted by the kickback of a failing economy and an obvious drop in business travel.

“The beginning of 2012 looks rather difficult, but we remain confident that there will be a positive RevPAR growth over the entire year, between 2% and 4%” commented Georges Panayotis, President of MKG Group. “The Olympics in England will positively affect the second semester 2012 in a chain effect while the calendar for trade shows in Germany is looking good. The question lies on the ability to maintain a positive economic growth, which feeds the number of business trips.”

The President of MKG continues: “In a major country like the United States, tourism has become a strategic economic stake, as President Obama has indicated. Over there, hotel groups unite to fight against third party domination found on the web that is operating a true hold up on hotel distribution and the business activity of many hotels. We are waiting for the same thing to happen in Europe: a continent whose Airbus sales surpassed Boeing’s. National policies are still too shy to encourage the development of hotel supply. In all of Europe, the supply is stagnant, even regressive, and absolutely needs to be stimulated.”

Established in 1985 by Georges Panayotis, MKG Group has built a solid reputation for business expertise and substantial European-based know-how in the fields of tourism, lodging and food service. MKG Group meets the needs of each of its clients by providing valuable analytical and decision-making skills necessary for success.

For further information , please contact :

MKG Group - International Development Department
Vanguelis Panayotis
T. : +33 (0)1 56 56 87 87

MKG Hospitality - Media Contact
Michael Komodromou
Tel: +44 (0)20 7624 4030


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Also See: 2011 Was a Fine Year for French Hospitality: The Year-in-Review of the French Hotel Industry by MKG Group / January 2012

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U.S. Hotel Groups Still Dominate at Home with Hilton Leading the Pack; With Market Saturation Nearing, Groups Looking Abroad to Promote Products and Concepts / September 2011

Key Hotel Performance Indicators for the Middle East and North Africa Region (MENA) are Split Down the Middle / September 2011

Middle East & North Africa Hotel Markets End 2010 with Great Disparity, Uneasy Hotel Growth is Forecast / February 2011

Poland's Hotel Industry on Upward Trend with RevPAR and Occupany Steadily Growing / November 2010

The Top 10 Hotel Groups in the World; IHG Retains Top Spot With Nearly 650,000 Rooms / July 2010

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The 2008 Top 20 European Hotel Brands Ranking and the Top Ten Hotel Groups Ranking / March 2008

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