European Hospitality Sector Outlook 2024 - Extended Version

THE TIDE IS TURNING

TOURISM VS ECONOMY TRENDS - EUROPE (INDEX, 2000 BASE)

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In recent years, the hotel sector has undergone a tumultuous journey, facing complete closures during the pandemic, followed by a robust recovery driven by revenge travel. Despite the sector's strong operational rebound, the European hotel investment market has been impacted by unprecedented increases in financing costs as well as economic and geopolitical challenges. Nevertheless, the decrease in transaction activity has been less pronounced compared to the broader real estate sector. This resilience can be attributed to various factors, with a key driver being the ongoing trend of investors shifting towards alternative asset classes, benefiting from structural changes in the economy and society, which, in the case of hotels, has been reinforced by the exceptional performance recovery, surpassing the pre-pandemic levels across most markets. Looking ahead, while the robust performance growth is expected to ease in 2024 amid economic and geopolitical challenges, it is anticipated to endure. Additionally, investment activity is projected to increase gradually, particularly in the second half of the year.

350%

300%

250%

Despite the sector's strong operational rebound, the European hotel investment market has been impacted by unprecedented increases in financing costs as well as economic and geopolitical challenges.

200%

150%

100%

50%

0%

2011

2017

2012

2021

2015

2013

2031

2018

2016

2019

2014

2001

2010

2027

2022

2025

2023

2032

2033

2028

2026

2029

2024

2007

2002

2020

2005

2003

2030

2008

2006

2009

2004

2000

OVERNIGHT TOURIST ARRIVALS

GDP, REAL US$, 2021 PRICE

5.0%

3.5%

1.8%

1.5%

CAGR 2000 - 2019

CAGR 2023 - 2033

OVERNIGHT TOURIST ARRIVALS

GDP, REAL US$, 2021 PRICE

Source: Oxford Economics

4 HOTELS OUTLOOK 2024

THE TIDE IS TURNING AMALGAMATED | 5