BERLIN — After an exceptionally strong summer travel season in 2023, Europe is expected to see yet another strong season this year, with both economists and hotel industry experts sharing reasons for optimism across the continent.
Market watchers will likely be disappointed that they won't be getting as many interest rate cuts as they'd hoped for at the beginning of the year, said James Pomeroy, HSBC global economist during the 2024 International Hospitality Investment Forum. But the best possible news is the global economy is likely out of the weeds when it comes to more interest rate increases.
Pomeroy said the floodgates could soon open for global financial markets.
"There's so many central banks across the world, in Asia in particular, who are basically just waiting for the [Federal Reserve] to cut, and as soon as the Fed cuts ... you'll have more and more central banks cutting rates," he said.
This is a moment of optimism, even for famously pessimistic economists, Pomeroy said.
"At the moment, even the most downbeat economists you could ever find would struggle to be too bearish, and the reason is because almost every single chart we look at is going in the right direction," he said.
STR Managing Director Robin Rossmann agreed on that overarching sense of optimism, specifically for the second and third quarters of 2024.
Based on business on the books for the second quarter, midweek demand is three percentage points higher for hotels than the same period in 2023, Rossmann said.
"That's going to drive much better midweek rates for the hotel sector," he said.
Part of the increasing strength for 2024 is improving business travel, which supplements the strong leisure travel seen last summer, Rossmann said. While some industry watchers were concerned that fewer international leisure travelers could come to Europe this year, Rossmann added that demand is expected to remain strong.
"We can tell you that [the third quarter] will be stronger than it was last year," he said. "I thought we wouldn't have a summer that was as strong as last year, but it turns out it will be."
The early concern for this upcoming summer was over how much U.S. travelers would continue to come to the continent and whether "everybody who wanted to come had come already," Rossmann said. But the expectation now is that U.S.-to-Europe travel will increase 10% year over year. Some of that demand is attributed to Taylor Swift's Eras Tour hitting European markets, he added.
Pomeroy said he expects consumer spending throughout Europe, and globally, to remain strong this year, despite earlier worries that 2024 could be the period where recessions could hit various global markets. And demand is slated to remain strong across the broader travel industry.
"The service sector did great [in 2023], and it will probably do great this year as well," he said.
Another bit of positive economic news is an uptick in manufacturing, after various durable goods companies have largely worked through inventory problems and businesses are back to ordering things such as electronics and furniture.
"Trade is going to pick up," Pomeroy said. "Manufacturing activity is going to pick up. Jobs are going to pick up, and confidence is going to pick up. And that all spills over to the services side of the economy."