Hotel market development – fourth quarter 2016

Strong underlying hotel market

Demand in the international tourist market increased by close to 4 percent in 2016 according to the UNWTO. It was the seventh consecutive year of growth and it illustrates the underlying strength of the tourism market despite security challenges. The UNWTO’s outlook remains positive, with expected growth in 2017 of 3-4 percent globally and 2-3 percent for Europe. The hotel markets in North America and Europe developed well in general in the fourth quarter. Both of the markets are high up in the hotel business cycle, with growth driven mainly by improved average prices. Altogether, RevPAR (revenue per available room) increased both in Europe and the US by 3 percent in the fourth quarter.

Sustained growth in important hotel markets

RevPAR development quartely (in local currency).

  FY
'12
FY
'13
FY
'14
FY
'15
FY
'16
Q4
'15
Q1
'16
Q2
'16
Q3
'16
Q4
'16
   
USA 7% 5% 8% 6% 3% 5% 3% 3% 3% 3%    
New York 6% 4% 3% -2% -2% -2% -1% -3% -2% 1%    
                         
Montreal -2% 6% 10% 7% 9% 6% 5% 1% 16% 10%    
                         
Europe 5% 2% 6% 7% 2% 6% 3% 3% 2% 3%    
London 2% 1% 3% 2% -1% 1% -4% -3% 1% 2%    
Brussels -2% 2% 3% 2% -18% -10% -8% -29% -26% -4%    
Berlin  9% 0% 5% 8% 4% 7% 6% 0% 6% 3%    
Frankfurt  5%  5%  -2%  9% -2%   1% 4%  3% -9%  -1%     
                         
Stockholm -5% 0% 2% 9% 8% 11% 4% 20% 0% 6%    
Oslo -3% 4% 1% 8% 3% 7% 2% 0% 9% 0%    
Helsinki 4% -5% 2% 2% 7% 6% 6% 12% 11% 0%    
Copenhagen 5% 6% 4% 11% 13% 14% 3% 15% 18% 14%    

Source: STR (USA, Canada, Europe, Finland), Benchmarking Alliance (Sweden, Norway, Denmark)

Increased avarage prices drive growth th the US and Canada

In the US and Canada, RevPAR increased by 3 and 6 percent respectively in the fourth quarter, driven mainly by higher average prices. The hotel business cycle has reached a more balanced phase in the US in which supply and demand are growing at the same pace after several years of demand deficit. Montreal had a strong fourth quarter (+10 percent) explained by good demand from, for example, the US and Asian inbound markets and positive average price development. The closure of a large hotel for renovation also had a positive impact.

Europe positive on the whole

The hotel markets in Europe as a whole developed positively in the fourth quarter and RevPAR increased by 3 percent as a result of stable growth in demand and improved average prices. Certain European countries benefitted from a change in the security situation. Spain and Portugal had record numbers for 2016, while Turkey lost one third of its RevPAR compared to 2015. The rate of decline in Brussels and Paris slowed significantly in the fourth quarter and positive growth should be possible towards the end of the first half of 2017. London experienced a small upswing in the fourth quarter, partly due to a weaker currency. Development in Germany remained strong and RevPAR increased by 4 percent in the quarter and 5 percent for the full year.

Strong querter in the Nordics

RevPAR growth in Oslo and Helsinki remained unchanged during the quarter. In Helsinki the opening of two new hotels with a combined 700 or so rooms had a dampening effect and this is likely to continue in the short term. Growth in RevPAR for 2016 as a whole in Helsinki was good, at 7 percent, mainly driven by improved average prices. Copenhagen ended an already strong year with growth of 14 percent in the fourth quarter. Several factors explain this strong development, including a record strong year for conferences and trade fairs and limited addition of new hotels. Development was similar in many German cities such as Düsseldorf, Hannover and Hamburg. Stockholm enjoyed continued strong development, with RevPAR growth of 6 percent in the fourth quarter. Demand increased in Stockholm for the seventh consecutive year at the same time as average prices increased by 5 percent for the year as a whole.