2014 was a good year for hoteliers. Europe attracted 22 million more international tourists than it did in 2013. All but two of the markets we look at saw RevPAR growth, and many are breaking records, especially on occupancy.
The economic backdrop has been generally supportive, growth has remained strong in the US and key emerging markets, the Eurozone has grown, albeit modestly, and falling oil prices have increased consumers discretionary spending power. We expect economic growth to continue in 2015 and 2016, although the risks are weighted to the downside given uncertainty over the future of Greece and the Eurozone and instability in the Middle East and North Africa. In this fourth edition of the European cities hotel forecast we look at 20 cities across Europe. In most hotel markets we are expecting rising occupancy and Average Daily Rate (ADR), although generally at a slower pace than 2014. But some cities are facing specific challenges; Geneva and Zurich are made more costly by the appreciation of the Swiss Franc, whilst Moscow is impacted by international sanctions. Other markets will receive a welcome fillip, such as London where the Rugby World Cup will bring additional visitors.
We build on previous editions of the forecast in considering the impact of global megatrends on the hotels business and adaptive strategies for 2015 and beyond.
- The increasing potential to use robots and Artificial Intelligence for hotels to cut costs and improve the customer experience;
- The potential for a new global deal on climate change to affect travel behaviours;
- The strength of the US economy and consumer;
- The potential for new smartphone enabled technology (such as iBeacons) to be adopted in the sector; and
- The rising importance of sub-Saharan Africa in the global economy.
The sector still faces plenty of challenges and geopolitical uncertainties. But we are optimistic in its ability to compete, adapt and succeed; especially now economic fundamentals of rising prosperity and increased globalisation have reasserted themselves following the financial crisis.