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Hotels in Europe Post Optimistic Results in Q1 2019

News The start of the year has been positive for the hospitality industry of Europe so far as the majority of destinations posted optimistic results for the first quarter of 2019. This has become possible thanks to the growing demand in many destinations and several major events. An increase in the hotel room rates is another reason for the growth.

The key metrics of the continent are the following (Q1 2019 vs. Q1 2018). Occupancy decreased slightly (-0.2% to 63.7%), but thanks to the growing average daily rate (ADR) by 1.6% to 101.28 euro, the region’s RevPAR (revenue per available room) added 1.3% to 64.56 euro. Even though it is a modest gain, it is very important as the first quarter is usually not the best time for the hospitality industry of Europe.

Naturally, some destinations performed better than others. For example, hotels in Madrid had a powerful start of the year. All key metrics were growing in the first quarter of 2019. Occupancy added 2.6% to 71.1%, ADR was growing even faster - +5.7% to 106.79 euro. These metrics made RevPAR grow as well – the revenue per available room added 8.4% to 75.95 euro. This is a milestone result for the Spanish capital – the absolute occupancy and RevPAR are the highest among the first quarter results.

However, there is a reason for such success. Madrid hosted several major events in Q1 2019, which caused a rise in demand of 4.4%. These are Mercedes Benz Fashion Week Madrid (took place on January 24-29), ARCOmadrid (27 February-3 March), World ATM Congress (took place on March 12-13), and Motortec Automechnika (March 13-16). It would also be a mistake not to mention the match between Barcelona and Real Madrid on March 2 that brought many football fans to the city.

Unfortunately, not all destinations in Europe performed equally well. Even some major European capitals experienced difficulties in Q1 2019. Hotels in Athens, Greece, are no exception. They experienced a significant drop in occupancy (-11% to 54.5%) that even a growing ADR of 1.9% to 103.34 euro couldn’t offset. In the end, RevPAR lost 9.3% to the level of 56.32 euro. On the other side, this decline is not unexpected because Q1 2018 was incredibly strong in Athens. At that time, RevPAR surged by 13.2%. However, the absolute occupancy in Q1 2019 is the worst since 2014. The increase in hotel supply of 2% is one of the main reasons for the poor performance. Additionally, short-term apartment rentals in Athens are on a rise, and this explains why airport arrivals are growing, but hotel demand isn’t.

09.05.2019

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