London is set for a record breaking 2014, with RevPAR (revenue per available room) growth of 3.8 per cent, according to PwC’s latest European cities hotel forecast and UK hotel update. â€¨ â€¨
There is also a growth story across Europe as improving economic and travel backdrop rejuvenates trading.â€¨. The top RevPAR growth stories in 2014 are likely to be Dublin, London and Paris, PwC says, with London, Paris and Edinburgh seeing the highest occupancies in 2014.â€¨. Swiss cities remain in a league of their own on price and are the most expensive.â€¨â€¨
According to PwC’s forecast, the improving economic and travel backdrop has helped rejuvenate trading in all but one (Madrid) of the 18 cities analysed. But the pace of growth varies from city to city and the challenge for hotels will be to capitalise on this improving climate while responding to the megatrends impacting their business.
In 2015, in local currency, London (5.2%) is forecasted to top the growth league for RevPAR, followed by Dublin (3.8%), Lisbon (3.4%), Prague (3.2%) and Moscow (2.8%).â€¨ â€¨
Robert Milburn, Head of Hotels at PwC, said business travel was expected to influence hotel trading in Germany, UK and France.â€¨â€¨
Liz Hall, (pictured) Head of Hospitality and Leisure Research at PwC, said a mix of Average Daily Rate (ADR) and occupancy were driving prices, although in many cities ADR is the stronger metric. “This is true in cities like London where, despite a high supply pipeline, occupancy is already very high and the city is virtually full up mid-week. By contrast, it’s largely occupancy driving growth in Lisbon and Milan,” said Hall.â€¨ â€¨
“Supply will cast a shadow in some cities; high levels of new supply could drag down performance in off-peak times. Moscow, Amsterdam, London, Berlin, Edinburgh, Zurich and Vienna have some significant pipelines, some above the long term average.”â€¨ â€¨
The most expensive city for ADR in Europe is Geneva (€ 230.50), followed by Zurich (€ 196.40), then London (€ 163.80).â€¨ â€¨
Geneva also tops the table for RevPAR (at €152.30), with Zurich (€ 142.70), London (€135.50) and Paris ( 126.90) staying ahead of the others.â€¨â€¨
There are 61,000 rooms estimated to be under construction in Europe according to hotel data research organisation STR Global. With demand currently outstripping supply, these levels are not considered an issue, although at a local market level this could be a different story. Russia, UK, Turkey and Germany have sizeable pipelines and account for around 60 per cent of the 61,000 rooms.â€¨ â€¨
Commenting on what London can expect in 2014 and 2015, Hall, said: “There are plenty of events to draw in visitors and a relaxation of Chinese visa rules will also be positive.
“London soaks up the new supply but off-peak it could be challenging. In 2015 hoteliers should have more confidence to increase rates, especially if 2014 swings to a seller’s market.”â€¨â€¨
In the regions, PwC’s research data points to 2013’s healthy growth being sustained in 2014, albeit at a slower pace. RevPAR growth of three per cent would equate to £44.60, the highest since 2007 in nominal terms.
Meetings and conferences continue to show improvement, with rates and demand increasing, although corporates are still seeking savings.
This was first published in the April issue of CN. Any comments? Email Zoe Vernor