The report highlights Europe’s record-breaking growth in 2017, despite significant political and socio-economic changes in the region over recent years, with an 8.4% increase in international tourist arrivals. This trend is set to continue in 2018, with figures in the report showing a 6.8% increase from January to June of this year.
Xavier Batlle, Director for the Advisory Division in Spain and Portugal, comments: “Our research confirms how connectivity and passenger arrivals have a strong positive correlation. Accessibility is a key driver of tourism and Europe attractiveness, with almost 60% of global overnight visitors travelling to their European destination by air. The main 13 European airports handled more than 660m passengers in 2017, remaining amongst the best-connected hubs in the world”.
Air transport and connectivity is a key factor in creating higher tourism potential and passenger stays through increasing arrivals. Iceland was the runaway winner in this area with a 488% increase in airport connectivity over the past decade and saw the biggest 10-year CAGR in hotel arrivals, with 12.3%. Croatia, Poland, Portugal and Spain also benefitted from increased airport accessibility.
Mature markets such as Italy, Germany, and France have limited connectivity growth due to their capacity-constrained airports. While Amsterdam, London Gatwick, Munich and Copenhagen Airport have are managing their capacity constraints well, this still looks to be a major focus of investment as, across Europe, €49 billion is being dedicated to increasing airport capacity by 31% by 2028.
Exploring aspects of the hotel market across Europe, the report looks at the best performing and fastest growing countries in terms of both demand and supply. Germany maintains the top spot for hotel arrivals in 2017, with year-on-year-growth of 4.2%, ahead of France and Spain. Together the three countries account for over half of all arrivals. The highest year-on-year growth was seen in Iceland, the Netherlands, Greece, Portugal, Belgium and Croatia. Both France and Belgium are recovering and performing well following a drop-in tourist demand, due to previous security concerns.
Italy has the largest hotel supply with 2.24 million beds, followed by Spain, Germany, France and the UK, while Portugal demonstrated the highest supply increase since 2016 with 7.7%. Overnight-to-bed ratios show how supply measures against demand, with all countries apart from Portugal and Austria showing increases, and the highest recorded are in Iceland, the Netherlands, Ireland and Spain, showing that there is further opportunity for new supply in these regions.
Reflecting on the data and findings across the countries, the report highlights the hotel investment hotspots on the continent, looking at RevPAR, brand penetration, performance uplift potential and liquidity. While Iceland, Greece, Croatia and Ireland repeatedly appear as attractive and prime regions for investment opportunities, the report shows that the extraordinary growth and performance of Europe offers endless possibilities to capitalise on the thriving market.
Finally, and in relation to the Spanish and Portuguese markets, Xavier points out: “Spain remains the leading market in terms of tourism overnights, and despite having 1.92m beds, the high O2B ratio indicates that selected opportunities remain for additional supply. Regarding Portugal, over the past decade the demand growth rate has more than doubled the supply growth rate, creating opportunities across the country”.
Carine Bonnejean, Managing Director – Hospitality Consultancy at Christie & Co comments, “Our pan-European hotel consultancy team, which now counts 30 consultants in the UK, Spain, France, Germany and the Nordics, advises our clients on any opportunity, whether it be acquisition, optimisation or exit of a single hotel or a portfolio, with the support of our data analytics team”.