Hotels in European markets are expected to record RevPAR increases across 2020 due to major events and robust transactions volume, though performance will be varied across the continent.
LONDON— Europe’s revenue-per-available-room growth will slow slightly in 2020 due to accelerated supply increases across the continent, demand shifting to North Africa, and the continuation of political and economic uncertainty, which still might include Brexit, according to sources.
Speaking at the 15th New Year Hotel Investment Summit organized by hotel consultancy Whitebridge Hospitality, Alex Robinson, senior manager of industry partners at STR, said the United Kingdom is expected to record positive RevPAR in 2020, but growth varies by market. STR is Hotel News Now’s parent company.
London recorded a RevPAR increase of 3.8% in 2019, but regional U.K. experienced a 2% dip. For 2020, London hotel RevPAR is predicted to grow 1.9%, as regional U.K. dips by 0.3%.
Robinson said for 2019 STR predicted RevPAR for hotels in Europe to be flat to up 3%, and it ended the year up 2.3%.
“Europe has enjoyed a decade of positive RevPAR growth, and that will continue in 2020, although it will be slower,” Robinson said.
There is hope for Amsterdam and Barcelona, two European cities where government officials have imposed moratoriums on future hotel construction, Robinson added.
“In Barcelona, we predict to show 0.6% RevPAR growth this year, which is impressive considering the strong recovery it has shown in 2019 following 12 months of RevPAR decline in the wake of the Catalan independence referendum in October 2017,” he said.
He added Amsterdam is predicted to have a 2.6% RevPAR increase in 2020.
Barcelona is even showing signs that some hotels are now being greenlit, he said.
In terms of U.K. cities, 2019 RevPAR results showed western markets suffered more than those in the southeast, midlands and northeast, Robinson said.
Robinson added only nine cities and towns in the U.K. had RevPAR growth in excess of 2% in 2019, reflecting the acceleration of supply growth. Notable examples of the impact of new hotel stock were Belfast and Glasgow, which posted double-digit RevPAR increases as recently as 2017.
Robinson looked at hotel performance through the lens of prominent soccer clubs, including the surprising fact that this season’s current runaway Premiership leaders Liverpool occupies a city that for full-year 2019 posted a decline in RevPAR of 5.7% compared with the same period in 2018.
If positive hotel-industry RevPAR is an indication of soccer success, the bandwagon should follow Basingstoke Town F.C., which plays its home games in Winchester, 20 miles down the M3 freeway from Basingstoke, and currently is in the Southern Premier South league, six divisional levels below Liverpool, Robinson said.
Basingstoke’s hotel RevPAR in 2019 grew 12.5%.
More soccer developments, including the U.K. and Ireland being co-hosts of soccer’s FIFA European Championships in 2020, are expected to be a boon for hotels.
Philip Camble, director of Whitebridge, said London did not feature as one of the largest hotel transaction markets in 2019, a rare omission for the U.K. capital.
Regional U.K. did make it to the third spot, thanks to a late 2019 portfolio deal of 17 Inter-Continental Hotels Group and Hilton-branded hotels bought from Marathon Asset Management hotels for £450 million by Thai investor DTGO Corporation.
Transaction activity is set to continue across Europe with completion likely on sales of France’s B&B Hotels and Center Parcs Europe, which has 22 resorts around mainland Europe and is currently owned by U.S. private equity firm Blackstone.
“The transactions market in Europe has cooled considerably in 2019 compared with 2018,” Camble said.
“The largest single transaction in Europe in 2019 was the DoubleTree (by Hilton) Amsterdam (Central Station), which was bought for €380 million ($422.6 million), or €682,000 ($758,530) per key, which is healthy,” Camble said, referring to AXA Investment Managers’ July acquisition of the 557-room property.
He said properties companies and institutional capital grew their share of European transaction deals in 2019, and that leases grew at the expense of management agreements.
“London RevPAR (Whitebridge predicts) will be more than 3% in 2019, thanks to the Euros (soccer), the Farnborough Air Show and the promise to get Brexit done,” Camble added.