Heatwave in the European hotel industry

Temperatures continue to rise on the Old Continent and with them the performance of the European hotel industry. For July, all indicators are pointing upwards for both 2022 and 2023, confirming the good dynamics of the sector in recent months. While Southern Europe is doing well at the height of the summer season, Central and Eastern Europe seem to be even more dynamic, with the Czech Republic, Latvia and Germany standing out in particular.

The European hotel industry recorded an occupancy rate of 74.8% in July, an increase of +0.4 points compared to July 2023 and +0.8 points compared to July 2022. A modest improvement, but one that finally reverses the trend of recent months, in which occupancy had fallen slightly. However, occupancy is much lower than in June, when it was 77.7%. On the price side, the evolution is more visible, with an average daily price that increased by +6.3% compared to 2023 and +14% compared to 2022.

This indicator is once again slightly below the previous month’s level, falling from 146.9 euros to 144 euros, but remains higher than in May (135.7 euros). The combined increase in occupancy rate and average daily price means that the European hotel industry is also experiencing growth in RevPAR, +6.9% compared to 2023 and +15.3% compared to 2022. This growth is much higher than that of June (+1.2% compared to 2023) and testifies to the dynamism of the sector at the height of the summer season. The upscale segment continues to lead in terms of visitor numbers, with a
An increase of +1.8 points was recorded, followed by the mid-range and economy segments with slight increases of +0.3 points and +0.1 points respectively.

As in June, the budget category is still the only one whose occupancy rate drops by -1.1 points compared to 2023. The opposite trend is seen in average daily rates, with entry-level segments showing the strongest growth (both +6.5%), although the mid-range and upper-class segments are not far behind with increases of +5.8% and +5.2% respectively. The same is true for 2022, with the budget segment leading the pack with an increase in average daily rates of +16%, followed by the economy segment with growth of +15.3%, while the upper-class category has the smallest increase (+10.7%). Unsurprisingly, the upper-class segment leads the RevPAR rankings with an increase of +7.7%, beating the continent’s average increase. The economy category takes second place with a RevPAR increase of +6.6%, and the mid-range closes the podium with an increase of +6.3%.

Despite a significant increase in average prices, the drop in occupancy has somewhat damaged the budget segment, which recorded a RevPAR growth of “only” +4.8%. While Italy, Portugal, Spain and Greece traditionally lead European tourism during the summer months, climate change seems to be upending this paradigm. The phenomenon of anti-tourism, which also affects these destinations, especially Spain, could also explain their absence from the top of the rankings, while the countries of Central and Eastern Europe, in particular the Czech Republic and Latvia, are making rapid progress. It remains to be seen whether this trend will be confirmed in August or whether, on the contrary, the southern European countries will regain their top position.

This article originally appeared on HSMAI Europe.