THE PIPELINE : EMEA
SUNSHINE
LOOKING FOR RAYS OF
Development and investment are in a holding pattern while European and Middle Eastern countries work to solve economic and political instability .
By ADAM KIRBY , CONTRIBUTING EDITOR
Save for a handful of robust gateway markets , hotel industry recovery in most parts of Europe the Middle East and Africa ( EMEA ) is a good ways away . New project starts are at a trickle in most markets , due both to difficult financing and questionable demand fundamentals . The news is not all dire , however , as London and Paris remain impregnable powers , while Dubai is showing renewed strength and Turkey is emerging as a hotspot . But overall , optimism for the EMEA hotel industry is hard to find .
Europe ’ s star market is clearly Paris . According to a PricewaterhouseCoopers projection , the City of Lights will lead all major Europe cities in occupancy ( 79.1 %), rate (€ 266 / US $ 354 ) and RevPAR (€ 211 / US $ 280 ) by fairly wide margins this year .
On a growth basis , Russia ’ s gateway cities look to be the breakout performers of 2013 among European markets , though they are starting from a low baseline . Driven by an expected 2 % occupancy gain , St . Petersburg is projected to see a 7.3 % RevPAR improvement this year , according to PwC — easily the strongest growth in the region — albeit taking it only to a modest € 55 ( US $ 72 ). Second on the RevPAR growth projections list is Moscow , at 5.2 %, which would take that city to € 104 ( US $ 138 ). Moscow ’ s lift would be boosted by an ADR gain of 5.2 %, the region ’ s greatest in that category , PwC projects .
The seemingly intractable economic crisis affecting Southern Europe has devastated hotel performance in Spain and Greece , with Italy not far ahead . PwC expects Madrid to have another dreadful year in 2013 , with its ADR plummeting further — 5.6 %, the biggest drop in the region , to just € 80 ( US $ 107 ), which would pull it below the 10-year average — causing RevPAR to plummet 5.8 % to just € 52 ( US $ 69 ). PwC projects only London will experience a more precipitous fall in RevPAR ( 7.9 %), but that is to be expected a year after hosting the Olympics . At an anticipated € 134 ( US $ 178 ), London ’ s RevPAR would be nearly triple that of Madrid .
Spain ’ s other gateway , Barcelona , is actually projected to see a modest RevPAR gain of 1.4 % in 2013 , to € 87 ( US $ 116 ), but that is due to an expected 2.7 % rise in occupancy as leisure travelers seek alternatives to troubled destinations in North Africa . Barcelona hoteliers must be nevertheless concerned by PwC ’ s projected 1.3 % drop in ADR .
The largest hotel group based in continental Europe , Accor , reports its economy hotels are suffering the brunt of Southern Europe ’ s struggles . Still , the economy segment had in recent years been outperforming expectations , says Christian Karaoglanian , Accor ’ s chief development officer . “ It ’ s still a segment that is performing well in terms of profitability , as RevPAR is not far from midscale hotels and investment [ requirements are ] far below ,” Karaoglanian says .
24 HOTELS March 2013 www . hotelsmag . com