The European hotel sector grows 8.1 per cent in 2007
16 Jan, 2008, London
Asia maintains momentum with growth of 11.1%
The US market, more under pressure as supply climbs, still performs at 5.7%
The Middle East and Africa enjoys the strongest performance, growing at 12.5%
The UK continues to grow year-on-year with strong performance of 11%
2007 was a strong year for the EMEA hotel market with Lisbon, Portugal emerging as the top performer in RevPAR growth with revenue per available room (RevPAR; the most important benchmark in measuring performance in the hospitality industry) increasing 25.5 per cent. On an absolute scale, Dubai in the United Arab Emirates has overtaken Moscow and now has the highest RevPAR of €219. The Moscow market experienced a decline in RevPAR and average room rate (ARR) of -8.2 per cent and -9.9 per cent respectively although at an ARR of €300 it remains the most expensive hotel market in EMEA.
The figures were presented by James Chappell, Managing Director of hospitality performance consultancy, The Bench, at Cushman & Wakefield Hospitality’s New Year Hotel Investment Summit last night in London’s Mayfair. The Bench, which monitors over 400 markets worldwide, revealed global hotel performance trends at the event which also hosted a panel session with Sir David Michels, European strategist and board member of Strategic Hotels & Resorts; Alan Parker, CEO of Whitbread and Peter Zenneck, vice president development for Europe and north Africa for Jumeirah Group.
The increase in performance in RevPAR from Lisbon (25.46 per cent growth) was largely due to its hosting of the EU Presidency. Oslo at 16.8 per cent and Barcelona at 14.5 per cent also performed well. Apart from Moscow, the only other European market with a negative RevPAR result was Frankfurt (-2.7 per cent to €72) in the year following the World Cup, although the feeling is that the German market is performing better that it has done in many years.
In the UK, London's 10.2 per cent growth in RevPAR came on top of strong growth in 2006. Average RevPAR has increased from £111 in 2006 to £122, to reach its highest level since 2000. Edinburgh also enjoyed strong growth of 5.93 per cent to £97.
The panel’s feelings for hotel performance in 2008 was cautiously optimistic ‘people are worried, but never has RevPAR been so high, and no one knows when it is going to change’, said Sir David Michels. Peter Zenneck was similarly optimistic that 2008 would build on success enjoyed in 2007 in Jumeirah’s markets of Dubai, London and now New York ‘a record year again’ he said, and went on to explain the Jumeriah was enjoying up to 95% occupancy in some of it hotels.
Philip Camble, Director of C&W Hospitality said "The Middle East continues to defy the critics and regional unrest. With regional RevPAR growth in excess of 12% in 2007, spearheaded by the regional tourism (both leisure and commercial) powerhouse that is Dubai, performance in the Middle East is reflecting the dedication of its people and investors to diversify their economies and unlock their incredible potential as destinations of international standing."
When questioned about Jumeirah’s plans for 2008 Peter explained that they had a strong growth strategy in mind, and were looking to double their portfolio in prime gateway cities such as Paris. Commenting on yields in the upscale branded sector he said ‘[There is] such a demand for palace hotels in Paris we are seeing yields at 6, 5 and even 4%. I cannot see yields in that sector softening any time soon.’
To sum up the evenings discussions, Nick Pattie, Managing Director of C&W Hospitality, said ‘2007 was generally a good, or very good, year for hotel operating performances across Europe and the Middle East, but a year of two halves for hotel investment. 2008 will see strong operating performances continuing but growth slowing, whilst investment yields will soften in all but the prime markets.’
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Cushman & Wakefield Hospitality
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Notes to Editors:
Cushman & Wakefield Hospitality EMEA team consists of 28 staff based in London, Lisbon, Istanbul, Madrid, Prague and Budapest. They are currently instructed on over 50 major instructions throughout EMEA, have valued over €3 billion in hotel assets since 2006 and are conducting operator selection on over 10,500 hotel rooms. Development projects include Maluane, Mozambique; Sao Vicente, Cape Verde; CostaTerra, Portugal; Heathrow, UK and Sofia Airport Centre, Bulgaria. C&W Hospitality EMEA provides development consultancy advice, valuations, operator selection, investment advisory and agency for the hotel and leisure sectors. They are supported by hospitality teams in Asia Pacific and the United States which means Cushman & Wakefield can provide clients with an integrated cross border service from over 80 dedicated hospitality professionals. To find out more about Cushman & Wakefield Hospitality, see www.cushmanwakefieldhospitality.com