London once again heads up new hotel supply in Europe in 2020, but Dublin also is poised to have a remarkable year if everything in the pipeline opens.
REPORT FROM EUROPE—The heat index of European markets across 2020 can be judged by markets’ pipeline and forward-booking numbers, according to sources.
Alex Robinson, senior manager, industry partners, at STR, the parent company of Hotel News Now, said data shows London will begin this next decade in the same spot as it started the last one—number one.
Top 10 markets for 2020 by pipeline room count, according to STR data, are:
- London— 8,465 rooms in 76 properties;*
- Dublin—3,232 rooms in 27 properties;
- Frankfurt—2,565 rooms in 13 properties;
- Munich—2,467 rooms in 13 properties;
- Vienna—1,980 rooms in 10 properties;
- Amsterdam—1,973 rooms in seven properties;
- Düsseldorf—1,851 rooms in nine properties;
- Copenhagen—1,800 rooms in six properties;
- Manchester—1,765 rooms in 11 properties,
- Paris—1,759 rooms in 11 properties.
Robinson said he is not surprised by London’s continued dominance, despite uncertainty in the United Kingdom over Brexit.
“New supply is nothing new to London, averaging well over 3,000 new rooms per year since 2010. As we transition from one decade to another, that trend looks set to remain the same, with 2020 forecasted to be another year that eclipses 3,000 new hotel rooms,” Robinson said.
He also makes an interesting comparison between London and the second city on the list.
“Moving west across the Irish Sea to Dublin, the Irish capital has added only 3,000 new rooms since 2010, (but) investors are attracted by the city’s high demand and roomnights compression, and the pipeline reflects that, with (3,232) new rooms to be added in 2020,” Robinson said.
He said the No. 3 city, Germany’s Frankfurt, represented a middle ground between “the constant churn of London and the glut of new stock in Dublin.” Since 2010, Frankfurt added on average 1,000 rooms per year since 2010, but in 2020, the city is expected to add 2,565 new hotel rooms.**
Business on the books
Steven Cote, product manager of Forward STAR, also part of STR, has analyzed the forward-bookings business of four Celtic cities—Aberdeen, Edinburgh, Glasgow and Dublin.
Aberdeen hotel performance has been hard hit over the last few years, while Edinburgh is one of the leading U.K. cities in terms of inbound investment, hotel openings and real-estate sticker prices.
The Granite City might show some positive movement in 2020, but things are far from normal, Cote said.
“After several years of large year-on-year decreases, Aberdeen is starting to see some increases on their achieved year-to-date occupancy, average daily rate and revenue per available rate percentage changes, which really is a reflection of not being able to hit more of the rock bottom,” he said.
There are still reasons for pessimism, he said.
“Unfortunately, when looking at their forward performance, that uplift doesn’t seem to be coming through so strongly in their demand on the books for 2020 compared to previous years. The traditional high season in Scotland running from April to September had nearly double the amount of business confirmed in December 2018 compared to (2019),” he said.
Early signs for 2020 are mixed, he said.
“Year-to-date historic demand percentage change is outstripping supply, which is a rarity in the U.K. markets at the moment. That said, our Forward STAR data shows some worrying signs for Aberdeen hoteliers that summer 2020 is going to be a bit more challenging than this year,” he added.
The Edinburgh hotel market has been buoyant for the last few years, but difficulties might still present themselves over the next 12 months, Cote said.
“With 2019 year-to-date percentage changes showing that supply is outstripping demand, hoteliers in the city have done well to minimize the occupancy, ADR and RevPAR declines that have happened. A continued large pipeline into 2020 does present some challenges, but Edinburgh generally has the cultural, conference and sporting agenda to fill out tough periods,” he said.
“Looking ahead, on the whole, the city is only slightly pacing behind itself for the next 12 months. The most notable decline in forward occupancy is coming in July 2020, when nearly every day of the month is pacing behind the same time last year,” Cote said.
He notied this is due to the city hosting in 2019 the TED Summit, which had bookings confirmed several months in advance.
Cote also said Edinburgh would benefit from its close neighbor Glasgow hosting the 11-day United Nations Framework Convention on Climate Change conference next November.
“Savvy delegates have already figured out that Edinburgh is only a short commute away and will most likely be cheaper than Glasgow during that period,” he said.
Glasgow has had a tough 2019 so far with supply growing at nearly twice the rate of demand, which has led to high single-digit RevPAR declines, Cote said.
“Looking at their forward performance, they can take solace in the fact that they are generally pacing only slightly behind where they were at the start of December 2018. The city as a whole is firmly banking on the U.N. climate-change conference to blow some wind in their sails, and we can already see strong business on the books for that month compared to same time last year,” he said.
Soccer also will be a boon, he said, with several matches of the 2020 UEFA European Championships being played in the city. Qualifying for the competition is still ongoing for some nations, but the city already knows it will host two countries.
“June is currently on par with where it was at last year. However … there might be in increase in Czech and Croatian markets descending upon the city for those nights pacing ahead. Two large conferences in July as well stand out as bringing some strong business tourism into the city,” he said.
Similar to Edinburgh and Glasgow, Dublin has experienced an imbalance, with hotel supply growth outstripping demand increases, leading to occupancy, ADR and RevPAR declines year to date, Cote said.
Dublin will see noticeable new supply in 2020, which “should put some hoteliers at ease that the business on the books is broadly in line with where they were at last year,” he said.
The International Society of Radiographers & Radiological Technologists conference next year is expected to bring some relief for hoteliers towards the end of August.
“But the normal steady stream of larger conferences the city attracts seems to be missing slightly in the year ahead,” Cote said.
“Six Nations Rugby and music concerts will help with weekend compression, and perhaps some of the new supply meant to come on board will hold off while the city can recover from its losses.”
*Correction, 3 January 2020: This story has been updated to correct the number of hotels projected to open in London in 2020.
**Correction, 10 January 2020: This story has been updated to correct the number of hotels projected to open in Dublin and Frankfurt, and paraphrase a quote.