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HomeCommercialDomestic travel expected to drive European hotel recovery

Domestic travel expected to drive European hotel recovery

by LLP Editor
29th Mar 21 9:06 am

The recovery of the European hotel market will initially be driven by domestic travel demand, with hotel revenues not forecast to recover across the market to pre-pandemic levels until 2024, according to the latest research from global real estate advisor, CBRE.

The findings show that European countries with strong domestic leisure and corporate demand and less reliance on international demand, particularly long haul, are likely to recover sooner.

This was the case during the partial reopening of hotels in H2 2020 where domestic leisure demand was the key driver of hotel performance across Europe. Hotels with a strong leisure offering performed strongly when travel restrictions were eased, and serviced apartments generally outperformed the market with guests attracted by their size and ability to allow guests to socially distance.

The challenging trading conditions and market uncertainty contributed to a decline in hotel investment volumes in all countries across Europe in the 12-months to Q4 2020, with hotel investment totalling €6.6bn, a decrease of 75% year-on-year.

However, the sector remains very attractive to investors and according to the report, significant additional capital was raised in 2020 by a wide range of investors to target hotel opportunities.

Owen Pritchard, Executive Director and COO, EMEA Hotels at CBRE said: “We expect a slow recovery across the market in 2021 but with pent up demand driving strong performance in the leisure sector during the summer months and early autumn. Consumer behaviour will continue to drive product innovation and ESG will becoming increasingly important. Operating structures will continue to evolve, and franchises will remain the predominant way most brands continue to grow distribution.”

 

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