European hotel market recovery under threat
August 04, 2010 |
Otus today publishes the likely depressive effects of public sector cuts on hotel demand in Europe, which, on top of the sharp rise in hotel chain room supply over the recession means that room occupancy could plummet from 2011.
In the UK, average public sector cuts of 25% are forecast to reduce UK hotel demand by two million room nights in 2011, outweighing the recovery-driven growth in domestic business demand. At the same time, domestic leisure demand will be hit by the increase in VAT in January 2011 and the expected sharp rise in unemployment. Short-haul foreign leisure demand will be constrained by similar economic policies across Europe and the savage budget reductions already imposed on Visit Britain.
The public sector induced demand problems will be aggravated by the counter cyclical 10% rise in chain room supply in Europe during the recession years. Thus, for hotel chains in the UK to maintain the room occupancy achieved in 2006 they will need to sell 17% more room nights in 2012 and Germany will need to sell 21% more room nights. Even the Olympics and the Queen
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