Further growth forecast for hotel industries in London and other European cities after "bumper" 2015

William Turvill
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London 2012 - Hotels
European hotels enjoyed a "bumper year" in 2015, according to PwC (Source: Getty)

Growth in the European hotel industry is set to continue this year but will not reach the levels of a "bumper" 2015, new research suggests.

PwC's European hotels forecast suggests a robust outlook for European travel will continue to drive the industry this year and next.

The report also noted that 2015 saw an almost 30 per cent rise in M&A activity in the sector, with a transaction volume totalling around €21bn (£16bn). The UK accounted for around 60 per cent of European transaction volume last year.

Read more: London’s hotels to benefit from 20-year high for occupancy rat

Sam Ward, UK hotels leader at PwC, said: “Overall, we forecast there to be continued activity in the hotel investment market in 2016 albeit slightly more subdued to the record levels achieved in 2015.”

According to the forecast, London will be the best performing city for occupancy in 2016, with an 82.9 per cent rate. This figure is forecast to improve to 83. 5 per cent in 2017.

Paris is the highest city for average daily rate, €252.50, with London in fourth at €202.20.

And Paris was also top in terms of revenue per available room, with London third at €167.50. The UK capital is forecast to leapfrog Geneva into second next year.

The professional services firm said 17 out of 19 cities focused on - with the exceptions of Brussels and Milan - are expected to achieve revenue growth this year. And all but Geneva and Rome will grow in 2017.

Read more: London hotel industry set for record revenue growth in 2014

Liz Hall, head of hospitality and leisure research at PwC, said: “Many of the cities featured are mature gateway cities and global leaders in trading performance. The growth also reflects the continued search for safer and good value destinations as the turmoil in North Africa continues.

“Growth in the travel and hospitality sector is expected to continue to outpace the wider economy, all helped by the weak euro. So far European travellers have only seen modest air fair price reductions as a result of the fall in oil prices – 2016 could herald even better news.”

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