The report highlights Europe’s record-breaking growth in 2017, despite significant political and socio-economic changes in the region over recent years, with an 8.4% increase in international tourist arrivals. This trend is set to continue in 2018, with figures in the report showing a 6.8% increase from January to June of this year. Southern and Mediterranean Europe showed an impressive 12.8% increase, driving the growth of the region overall.
Air transport and connectivity is a key factor in creating higher tourism potential and passenger stays through increasing arrivals. Iceland was the runaway winner in this area with a 488% increase in airport connectivity over the past decade and saw the biggest 10-year CAGR in hotel arrivals, with 12.3%. Croatia, Poland, Portugal and Spain also benefitted from increased airport accessibility. Mature markets such as Italy, Germany, and France have limited connectivity growth due to their capacity-constrained airports. While Amsterdam, London Gatwick, Munich and Copenhagen airports are managing their capacity constraints well, this still looks to be a major focus of investment as, across Europe, €49 billion is being dedicated to increasing airport capacity by 31% by 2028. This is required to make a real impact and improve capacity in the long term.
Exploring aspects of the hotel market across Europe, the report looks at the best performing and fastest growing countries in terms of both demand and supply. Germany maintains the top spot for hotel arrivals in 2017, with year-on-year-growth of 4.2%, ahead of France and Spain. Together the three countries account for over half of all arrivals. The highest year-on-year growth was seen in Iceland, the Netherlands, Greece, Portugal, Belgium and Croatia. Both France and Belgium are recovering and performing well following a drop in tourist demand, due to previous security concerns.
Italy has the largest hotel supply with 2.24 million beds, followed by Spain, Germany, France and the UK, correlating with their strong demand, while Portugal demonstrated the highest supply increase since 2016 with 7.7%. Overnight-to-bed ratios show how supply measures against demand, with all countries apart from Portugal and Austria showing increases, and the highest recorded in Iceland, the Netherlands, Ireland and Spain, showing that there is further opportunity for new supply in these regions.
Reflecting on the data and findings across the countries, the report highlights the hotel investment hotspots on the continent, looking at RevPAR, brand penetration, performance uplift potential and liquidity. While Iceland, Greece, Croatia and Ireland repeatedly appear as attractive and prime regions for investment opportunities, the report shows that the extraordinary growth and performance of Europe offers endless possibilities to capitalise on the thriving market.
Anna Friedrich, Associate Director at Christie & Co who led the preparation of this report comments, “This year we have introduced our proprietary correlation analysis which has significantly increased the quality of our performance forecast and helped identify European investment hotspots. The findings show that the UK is one of Europe’s largest outbound markets and accounts for double digit overnight shares in Iceland, Spain, Portugal and Greece. This exposes these markets to performance decline should UK demand decrease after Brexit.
“There are plenty of opportunities in the region for opportunistic investors and, as highlighted in the report, connectivity remains a key factor in the viability of these locations. Maintaining connectivity between European markets and the rest of the world, particularly Asia, is vital in driving further growth in the European tourism sector.”
Carine Bonnejean, Managing Director – Hospitality Consultancy at Christie & Co comments, “Our pan-European hotel consultancy team, which now counts 30 consultants in the UK, Spain, France, Germany and the Nordics, advises our clients on any opportunity, whether it be acquisition, optimisation or exit of a single hotel or a portfolio, with the support of our data analytics team. Whatever the situation, we can help to formulate a strategy to deliver investment targets.”