December 2024: A strong finish for European hospitality
The end of the year has been favorable for European hospitality, with notable improvements in performance indicators, both in occupancy and average daily rates (ADR). However, this growth hides disparities, as the upscale segment serves as the primary driver of activity, compensating for the relative weakness in lower-tier categories.
Europe’s average occupancy rate increased by 1.6 points in December, reflecting the continent’s appeal to international travelers during the holiday season. Conversely, domestic demand across major countries has been cautious, particularly in the economy segment.
This trend, evident throughout the year, persisted in December 2024. Occupancy rates declined in budget and economy segments, showing improvement only from 2-star hotels upward, with the upscale segment achieving a 3.4-point increase. Similarly, ADR remained stable in budget categories but showed significant growth starting from the midscale segment, with luxury hotels seeing nearly a 4% increase.
A larger bridge between Economy and Upscale performances
The revenue per available room (RevPAR) across Europe mirrored these divergences: a 2% drop in the budget segment contrasted with a nearly 10% increase in upscale hotels. A 5.8% overall increase in RevPAR highlights the weight of high-end hotels, buoyed by international tourists seeking festive experiences in destinations like Paris, sunny locales, or Eastern European capitals. Countries such as Latvia, Hungary, the Czech Republic, Poland, and Austria recorded double-digit RevPAR growth due to the holiday atmosphere. Similarly, Spain, Portugal, and Greece saw double-digit jumps, driven by favorable weather.
Northern and Western Europe displayed more modest results due to the lower prevalence of upscale hotels. Industrialized countries like France, the UK, the Benelux region, and Germany saw economic hotels limiting growth, especially in France and the UK, where domestic demand was hindered by political and social tensions.
December, a good representation of what 2024 was all about
December 2024 reaffirmed trends from earlier in the year: the robust performance of upscale hotels, fueled by international tourists benefiting from a favorable exchange rate, contrasted with the sluggish domestic-dependent economy segment. While markets like France and the UK have completed their post-pandemic recovery, Spain stands out with its renewed appeal and dynamic ADR growth, likely to stabilize in 2025.
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