Hotels in Europe experienced peaks of demand thanks to major sporting events and concerts this summer, but in even better news there's evidence that group business is recovering nicely.
The wild swings in demand from the pandemic years seem to be over, and hotel performance is getting a bit more predictable, according to panelists from Cvent and STR who participated on a webinar last week on hospitality performance insights. STR is CoStar Group's hospitality analytics division.
European hotels are seeing an uptick from a return of meetings, incentives, conventions and exposition events and business travel from groups and transient guests, said Riccardo Galanti, director of sales at Cvent.
Average booking windows for large meetings and events and corporate-travel business in Europe has extended to 199 days, with approximately 30% only now being proposed to be held within 90 days from the request for proposal being submitted. He added average value for an event request for proposal in Europe is $57,000 with an average attendance of 93 people.
The U.S. has once again become the dominant feeder markets for large events in the U.K. and Europe, he said. Between January and July, 4,460 RFPs had been generated from the U.S. at a value of approximately $468 million, Galanti said. For the same period, the U.K. generated 4,297 RFPs at a value of approximately $159 million.
Spain was the most popular destination in Europe for events, securing $292 million in value in the same period, up $45 million from the same time last year, Galanti said.
Christina Choueifaty, senior account manager at STR, said Spain's hotel industry has been quite healthy across the board.
“Spain’s occupancy is very nearly back to its prior peak, and ADR there is the story, with phenomenal rate growth. There has been year-on-year, double-digit increases across the segments,” Choueifaty added.
Events have been the driver in Spain, too, she added, including events and meetings involving the European Society of Medical Oncology and European Physical Society on Gravitation.
In Paris, which hosted the 2024 Summer Olympics, group business on the books outlined that occupancy appears to be steady, with corporate events keeping demand healthy.
Based on how 2024's group bookings pace has grown, there's reason for optimism for further growth in the segment next year, Galanti said.
“Corporate RFPs in Europe for the 2024 program year are pacing 11% ahead of 2023. We have no data for 2025 yet … but the RFP season has started very well,” Galanti said, referring to those negotiations taking place now for events in 2025.
He said average daily rate for groups staying at hotels between 2020 and 2024 has increased by 29.7% from $232 to $301, while transient has not grown as much, increasing across the same period by 13.3% from $165 to $187.
As of late last year, European hotel occupancy started to match or outpace that of 2019, Choueifaty said. Europe's hotels are on track to surpass pre-pandemic revenue per available room, helped by core inflation in the continent now being stable and an imminent cut to interest rates from the European Central Bank, she added.
“Strong demand offers opportunity for ADR growth. Events will drive demand, as will business travel, both group and transient,” she said.
Choueifaty said hotel performance growth will slow as the industry moves further into the fourth quarter of this year.
Europe's sports, concerts drive hotel performance
Much talk in the hotel industry over the last few months has been on the “normalization” of occupancy, but there are opportunities to improve ADR and RevPAR.
“Performance growth in 2024 has largely been rate-driven, and this has in turn boosted healthy RevPAR numbers, with growth seen across all classes, the two best-performing segments being a 6.3% year-to-date July 2024 RevPAR increase in luxury and an increase of 5.4% in upscale,” Choueifaty said. “More normalization can be seen in that it is now weekdays that are the primary driver in growth across all classes, except economy. If there is panic, it is because metrics have moved those normal levels.”
Year to date through July, European hotel occupancy rose 1% year over year to 69%; Middle East hotel occupancy increased 3% to 68%; and hotels in Northern Africa posted a 2% decline to 56%. Compared to Australia and Oceania, Europe posted the highest average occupancy for the period. European hotels grew ADR by 4% year over year, outpacing the 1% hotel ADR growth in Australia and Oceania.
Mega-events drove tremendous leisure demand in European hotels this summer, with events such as the Paris Olympics, the Euro 2024 football tournament in Germany and Taylor Swift concerts throughout the region.
Hosting the Euro 2024 tournament this year helped Germany's hotels a lot, especially in the city of Dortmund, Choueifaty said. The most notable spike in ADR performance during that competition was in Berlin for the final match, in which Spain beat England.
Paris' hotels also received a boost from the tourism demand for the Summer Olympics.
“Between January and July, occupancy in Paris was down 4% in year-on-year terms, but during the Olympics, Paris occupancy outperformed that seen in Beijing and London when those cities hosted the summer Olympics,” she said.