European Hospitality Outlook Survey – DLA Piper March 2010

A survey of 417 European hotel executives has revealed weak industry confidence and dealt a blow to hopes of recovery this year.

Only two per cent of respondents expect a sustained upturn this year, despite 37 per cent predicting one year ago that 2010 would bring solid growth.

These worse-than-expected results are compounded by fears from over half of hoteliers (55 per cent) that room rates will not return to pre-financial crisis levels until after 2012.

■ 54 percent of respondents describe their 12-month outlook for the European hospitality industry as “bearish,”down from 84 percent in 2009. Bullishness is up from 5 percent to 27 percent. ■ 45 percent of respondents cite a decline in room rates as having had an adverse impact as opposed to 37 percent mentioning a decline in occupancy. ■ Only 2 percent of respondents expect to see a sustained recovery in the year ahead, but 54 percent see recovery a year away, up from 39 percent a year ago. ■ 68 percent of respondents view the economy and mid-market sectors as the most attractive opportunities for investors in the next 12 months. ■ 33 percent of respondents anticipate a slight increase in the amount of new-build activity in the coming year,as against 20 and 13 percent foreseeing a slight decrease and a significant decrease respectively. ■ Respondents identified India (24 percent) and China (28 percent) as representing the best opportunities for significant growth for their businesses over the next three years. ■ 33 percent of respondents are seeking “considerably less” advice and guidance from their bankers than 12 months ago. ■ The Eco or Green sector is the most attractive opportunity for only 6 percent of respondents.

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