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Hotel rates recording 'impressive' growth as occupancy peaks

PwC's European Cities Hotels Forecast predicts growth - and top occupancy in London, Edinburgh and Dublin

Pictured: Edinburgh's high pipeline will help it achieve high occupancy in 2016 and 2017

European hoteliers are set for two years of growth – but at a lower level than 2015 - according to PwC's European Cities Hotels Forecast 2016 and 2017.

And there was good news for UK and Ireland hoteliers, as the research found that the highest occupancies in Europe in 2016 will be in London, Dublin and Edinburgh.

The forecast analyses the main trends and future performance outlook for the hotel sector in 19 key European cities and destinations in 2016 and 2017. 

 “We expect trading fundamentals to continue to improve across virtually all the cities in 2016 and 2017, but after an exceptional 2015, the growth(for most) will be weaker than 2015,” said David Trunkfield of PwC. “Most will still see a continued increase in ADR particularly. With occupancies already high in many cities, most will see growth coming from ADR. The staying power of this growth trend in these cities is impressive.”

In 2016 Rome takes pole position with a 19.2 per cent increase in revenue per available room (RevPAR), as the Jubilee or Holy Year is expected to attract huge numbers of pilgrims. Next comes Dublin (9.1 per cent), Prague (6.6 per cent), Madrid (5.8 per cent) and Lisbon (5.7 per cent).

At the other end of the table, another Italian city, Milan, saw a large boost in 2015 from EXPO 15, and as a consequence sees a very negative comparative this year. Despite suffering from terrorism, both Brussels and Paris have relatively stable tourism sectors and are expected to recover back to average trends by 2017.

In 2017, Dublin takes up the baton, leading the cities in RevPAR growth (8.2 per cent), followed by Lisbon (6.9 per cent), Porto (5.8 per cent), Barcelona (5.5 per cent), Prague (4.9 per cent) and Milan (4.1 per cent).

In 2016, the highest occupancies are forecast to be in three cities, London (despite high supply additions and only a marginal increase forecast), Dublin (with little new supply opening) and Edinburgh (with a high pipeline). 

Amsterdam and Rome (up from 17 last year to 5th position in 2016) are not far off, followed by Berlin, Paris and Prague. Paris is expected to move back up again in 2017 as trading recovers from the impact of terrorist attacks. 

Hoteliers are increasingly confident that 2016 will see trading improve further, although many voice concerns around the stormy economic and geopolitical backdrop, local supply issues and pressure from shared apartments and accommodation models such as Airbnb. 

In 2016 the most expensive city in the survey is Paris which has dislodged Geneva to second place. Next, Zurich, followed by London, Rome, Amsterdam, Barcelona and Frankfurt which has seen strong growth.

In 2017, most cities, except Geneva and Zurich, see further ADR growth, albeit marginal for Brussels or Moscow. 

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