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Hotels in Central Europe back on track

Investment volume of over 265mn EUR has been transacted in the hotel sector during the first six months of this year.

In the first 6 months of 2015, hotels in Europe recorded a significant increase in key performance indicators compared to the same period in 2014. Average Daily Rate (ADR) rose by 8% to 112 EUR, occupancy to 68% (65% in the same period of 2014) and Revenue per Available Room (RevPar) by 11% to 76 EUR.

“The main factors driving growth in 2015 include the continued strength of inbound international tourism into Europe supported by Asian travellers, strong dollar driving demand from Americans and the challenges in North Africa that pushes leisure travellers to stay in Europe,” says Frédéric Le Fichoux, Head of Cushman & Wakefield’s CEE Hospitality Team.

Despite continuing economic and political uncertainty in Europe, travel and hotels did well in 2014. There were almost 600 million international visitors and 2.7 billion overnight stays recorded in Europe, representing a new record with these figures expected to increase further this year. 

Prague, Budapest, Bratislava and Warsaw are among the cities in the CEE region that have benefited the most from these macroeconomic factors. Prague outperformed all other mentioned cities in ADR (80.3 EUR growing by 10.4% year on year) and in RevPar (54.7 EUR growing by 18% year on year). 

Due to the double digit growth, availability of debt and resurged interest from investors in the region, the investment activity is growing, both with investment products and development projects.

Despite the limited development opportunities available in the region, a number of international hotel chains are screening the region in search of opportunities to expend their portfolio of brands. 

We have recorded the following hotel openings that are expected in the coming two years:

  • Warsaw            764 rooms to be opened until 2016 in the 3 to 5-star segments;
  • Budapest         500 rooms to be opened until 2016 in the 3 to 5-star segments;
  • Prague             727 rooms to be opened until 2017 in 3 to 5-star segments;
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