Amsterdam, Lisbon, Porto and Prague lead hotel growth in Europe

24 April 2018 Authored by Consultancy.eu

Record tourism in Europe is providing more than enough business to satisfy hotels and the disruptive shared economy led by Airbnb. City hotspots are flourishing across the continent with Amsterdam, Lisbon, Porto and Prague enjoying the strongest growth.

Sidestepping the threat posed by Airbnb and other disruptive accommodation platforms, Europe’s hotels are set to enjoy robust growth in 2018. The continent remains the globe’s premier travel hotspot, so much so that in some countries the novelty of ‘over-tourism’ has become a business talking point.

In 2018, hotels in Amsterdam, Lisbon, Porto and Prague are set to be the EU’s top performers, according to detailed reporting from PwC. The Big Four firm’s ‘European cities hotels forecast for 2018 and 2019’ used Revenue per available room (RevPar), Average Daily Rate (ADR), and Occupancy rates as key performance metrics in assessing local growth prospects.

Best placed for growth

Portugal’s second-largest city is set to furnish its hoteliers with Europe’s highest growth rate in 2018. Porto has enjoyed double-digit RevPar growth for four years running. This year’s projected 10.3% growth tops PwC’s European rankings despite falling far short of the superb 21% RevPar growth Porto clocked up in 2017. Porto offers more than a romantic getaway. The Atlantic city is a cruise and festival giant and home to a thriving startup and tech industry scene.

Further south, in the capital Lisbon, a humming tourist economy is expected to be boosted by added interest in the Eurovision Song Contest and the Web Summit — billed as the biggest technology conference on the planet. RevPar gains of 7% are being projected this year after 2017’s momentous 22% growth. Lisbon has cultivated a strong reputation on the conference circuit and will welcome around 25 new hotels in the next two years. All it needs, suggest the PwC authors, is a new airport to meet demand.

Amsterdam secured second spot on PwC’s city rankings. RevPar growth is expected to reach 7.1% but the report emphasises robust ADR gains as being the primary factor behind the Dutch capital’s success. Last year, more than 6.6 million tourists swept across the city’s canals. In 2019, the European Medicines Agency will complete its move from London and is expected to generate 36,000 extra hotel stays per year.

Revpar rankings

Prague, a favourite of Russian tourists which also entertains a revolving door of weekend trips from western Europe, should achieve RevPar growth approaching 7%. The Czech Republic as a whole enjoys a reputation as one of Europe’s safest destinations, serving it well while France, Germany and the UK endured a wave of terrorist atrocities. 

When in Rome?

This top four are set to easily outperform the eight other cities assessed by PwC in RevPar growth this year. Milan and Paris play catch up with projected growth of 3.9% and 3.6% respectively. In Rome, a paltry 1.8% growth rate is expected but the home of the Vatican and Coliseum still outranks Frankfurt and Zurich where negative RevPar growth is a likely outcome. 

Measured by occupancy rates, rankings for 2018 adapt slightly with London maintaining the top spot that it won in 2017. Amsterdam, Prague and Lisbon follow, with fellow high-performer Porto sitting in sixth spot. In 2019 Prague is projected to join London as the city with Europe’s fullest hotels and a bustling occupancy rate of 82.3%.

Occupancy rankings

PwC is not the only advisory firm conducting in-depth reports into one of Europe’s most lucrative but rapidly evolving sectors. Roland Berger has drawn up its own analysis of the continent's top performing cities by overnight stays. Consultancies can expect to play a more advisory role as hotel clients struggle to get ahead of disruptive factors, particularly the emerging shared economy.

For its part, PwC offered some free advice in the report, intimating that hotels would do well to recognise new accommodation networks as a legitimate and permanent feature of the industry. Big data could prove a valuable tool in helping hotels reevaluate their understanding of what attracts guests and what turns them off.

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