European Hospitality Sector Outlook 2024 - Extended Version
THE RESILIENT NATURE HOTEL PRICE PER ROOM INDEX (HEDONIC SERIES, INDEX VS 10YR AVERAGE) RESILIENT HOTEL VALUES IN EUROPE SELECTED COUNTRIES
130% SELECTED REGIONS AND LONDON
90% 100% 110% 130% 120%
120%
Whilst there has been notable yield decompression, the values of hotels across Europe are somewhat enduring. According to the hedonic data series by RCA, the values of hotels across Europe have increased by 14% in Q3 2023, relative to 2019. This seems too good to be true, but in some markets, it is plausible, thanks to healthy income growth that exceeded 20%, despite the intense cost pressures, especially in the case of utilities and wages. As hotels typically command relatively high operating margins, frequently above 35%, the costs would have to grow substantially faster than the revenues to start reducing profits. So far, this has been the case only in markets suffering from constrained revenue growth, such as in the CEE region affected by the Russian war against Ukraine. But even in this area, the latest figures show continued performance recovery. However, the RCA data indicating growing hotel values across Europe may be optimistic. Many recent sales were prime assets in core markets, and several were trophy hotels with high prices per room. This is likely skewing the data upwards, as in many markets, the hotel yield decompression has been stronger than income growth.
90% 100% 110%
"
80%
80%
70%
70%
60%
60%
Many recent sales were prime assets in core markets, and several were trophy hotels with high price per room.
50%
50%
Q1 Q3
Q1 Q3
‘08 ‘10 ‘12 ‘14 ‘16
‘18
‘20 ‘22 ‘23
‘08 ‘10 ‘12 ‘14 ‘16 ‘18 ‘20 ‘22 ‘23
SPAIN
UK FRANCE
GERMANY
ITALY
ALL EUROPE WESTERN EUROPE
GREATER LONDON
Source: MSCI Real Capital Analytics (Hedonic series)
HOTEL REVENUES ARE ABOVE 2019 LEVELS IN MOST MAJOR CITIES ACROSS EUROPE
(REVPAR YTD OCT 2023 VS YTD OCT 2019, INDEX)
PARIS
ROME
MILAN
BERLIN
LISBON
DUBLIN
VIENNA
ATHENS
MADRID
EUROPE
PRAGUE
LONDON
HELSINKI
WARSAW
ISTANBUL
BRUSSELS
BUDAPEST
BARCELONA
AMSTERDAM
MANCHESTER
COPENHAGEN
158
154
143
144
135
126
121
125
125
122
119
118
115
114
113
112
122
108
107
92
75
Source: STR Global (based on data in EUR except UK markets that are based on values in GBP)
HOTEL OPERATING PROFITS ARE ABOVE OR NEAR 2019 LEVELS IN MAJORITY OF MAJOR CITIES ACROSS EUROPE
PROFIT (GOP) CHANGE % REVENUE CHANGE %
(31%)
(41%)
LONDON (41%)
(45%)
DUBLIN (37%)
MADRID* (35%)
(39%)
WARSAW (29%)
EUROPE (37%)
BRUSSELS (24%)
(42%)
MUNICH (43%)
VIENNA (45%)
(29%)
PARIS
(43%)
(29%)
CITIES
MILAN
BERLIN
EASTERN
58
ALL MAJOR
EDINBURGH
BARCELONA
AMSTERDAM
50
MANCHESTER
32
27
25
23
24
23
21
22
12
19
18
18
18
8
8
15
5
4
12
11
10
1
-1
-5
-7
-8
-10
-17
-18
-20
(Based on PAR values for YTD Oct 2023 vs YTD Oct 2019)
Source: HotStats (based on Gross Operating Profit per available room (PAR) in EUR, sample of full-service branded hotels in city centres, data in brackets represent GOP margin in YTD October 2023, *whole market)
10 HOTELS OUTLOOK 2024
THE TIDE IS TURNING AMALGAMATED | 11
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