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October 2023: European hospitality enjoys an Indian summer

Between the many conflicts taking place in the EMEA region and galloping inflation throughout Europe, the situation is not looking ideal. Nature may be turning red this October, but European hotel performances remain mostly in the green. Unsurprisingly, Southern Europe is once again doing well thanks to sunny weather. Northern Europe performed less strongly, except for a few countries including the Czech Republic.

In terms of occupancy, European hotels recorded a similar level to October 2022 (73.1%). This is neither a good nor a bad result, but it is still below the 2019 levels for the same period (-3.7 points).

There is more movement in RevPAR, which stands at €90.9, up 5.1% on 2022 and 19% on 2019. Once again, this trend is being driven by a 5.2% rise in prices across the continent (+25% vs. October 2019).

Only the upscale segment recorded growth in occupancy (+1.8 points), while the budget segment saw its occupancy rate fall by 1.6 points between October 2022 and October 2023. However, compared with 2019, it is indeed the upscale segment that has seen the biggest fall in occupancy rates (-4.7 points).

Conversely, it is the budget segment that is showing the strongest growth in terms of average daily rate (+6.9%) and the upscale segment the weakest (+3.7%). As upscale properties increased their prices sharply in the wake of the health crisis, they now have less room for maneuver than other segments.

Overall, the upscale segment continues to fare best, with RevPAR up by 6.3% compared with October 2022 and by 20.8% compared with October 2019. Nevertheless, all segments have exceeded their pre-Covid activity levels.

A closer look reveals that only Greece exceeds its pre-Covid occupancy levels (+1.6%). However, the trend between 2022 and 2023 looks much more positive for all countries, except for Poland (-1.4 points), France (-1.2 points) and Germany (-1 point).

Conversely, Hungary and the Czech Republic performed well, with occupancy rates up by 8.3 points and 5.3 points respectively. With the exception of Poland (-1.4 points), all the Eastern European countries seem to be regaining ground at the start of the autumn period. Latvia is no exception, with occupancy up by 1.5 points.

The popularity of Prague and Budapest, particularly among the younger generation, partly explains these good performances from Eastern Europe. The Czech capital saw its occupancy rate rise by 4.2 points, while that of Budapest jumped by 8 points. The two cities posted RevPAR growth of around 20.7% and 18.6% respectively.

Few countries in Northern Europe are experiencing similar increases in activity levels to those in Southern Europe. Belgium (+12.1%), Hungary (+16.7%) and the Czech Republic (+19.7%) were the only countries to post RevPAR growth in excess of 10%, alongside Greece (+11.5%), Italy (+14.9%), Portugal (+16.9%) and Spain (+19.4%).

The rest of Europe is also showing an increase in activity levels compared with 2022. These increases range from 4.5% in the Netherlands to 8.5% in Luxembourg. So it seems that the Benelux countries are on an upward slope, benefiting from their attractiveness on both the leisure and business fronts.

In terms of prices, all countries are posting substantial rises compared with 2019. Once again, Southern Europe stands out, with Spain (+30%), Greece (+32.1%), Portugal (+39.3%) and Italy (+39.6%) recording the biggest rises.

The same countries are posting double-digit growth compared with 2022, while Germany (-4.7%), the UK (-2%) and Switzerland (-1.3%) are the only countries not to see their prices rise.

The Indian summer will therefore have widened the gap between the performance of southern and northern Europe even further. It will also have highlighted the growing attractiveness of Eastern European countries, apart from Poland, which have been recovering month by month since the end of the health crisis. However, the impact of the economic and geopolitical context is still being felt in the performance of hoteliers.

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