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Europe Hotel Forecast 2018 and 2019 – PWC

Another insightful report for owners and revenue managers for Forecast and Budget 2019 distributed by PwC Hospitality!

In a nutshell:

  • 2017 was an exceptional performance for travel in Europe, driven by the southern and Mediterranean region.
  • Strong demand of European within Europe. US, China and Russia demand definitely coming back and positively impacting European performance.
  • Optimistic outlook for 2018 and 2019. Highest growths are expecting to come from Porto, Lisbon (once again!), Amsterdam, Frankfurt and Prague.
  • Paris is recovering and aiming to retake the 1st rank in RevPAR by the end of 2018. Brexit’s uncertainty negatively impacting London but may benefit other destinations such as Amsterdam (corporate and group reallocations).
  • Hotel transaction volume continues to grow and is expecting to moderately increase in 2018. Exceptionally high in 2017 (+11% YoY).

Main future challenges and risks for the hospitality industry in Europe:

  • Profitability erosion: how to both increase RevPAR and profitability? It really depends on what is driving the RevPAR growth. While ADR may go straight to bottom line, a large increase in Occ% without an increase in ADR may negatively impact cost and therefore bottom line (while increasing RevPAR). Revenue Management becoming more and more “Profitability Management” as well as an important focus on the optimization of the distribution channels.
  • Fast changing guest needs: Hoteliers need more than ever to adapt to new trends, innovate and focus on attracting the new generation, while few brands are leading the pack (Accor, Marriott, IHG) few others that we will not mention here are still behind and need to wake up not to lose important market shares in the near future.
  • “The sharing economy – ignore it or embrace it?”: that has been in the centre of all discussions and experts panels for the last few years. While many hoteliers refused to recognize the impact of Airbnb and other platforms on the impact in their RevPAR performance, it’s now obvious that hotels have seen a slice of the pie shifted to others alternatives. Not necessary cheaper, and that’s actually where it’s becoming interesting! Guests are actually now looking for a different product, preferring to stay in an flat (serviced or not) rather than in a hotel. Change in behaviour? Contact with local hosts and local experience? Better price/value? How hotels can adapt to this new trend? Branded residences such as Four Seasons Hotels & Resorts can be a sustainable alternative? So many questions on this topic that still need to be answered.
  • Overtourism in some key destinations such as Amsterdam, Venice and Barcelona. I will even add Lisbon and Porto to this list, where local residents are pushed away from the city centre as tourists demand for Airbnb is heavily increasing real estate and monthly rent for locals. The government needs to tackle this issue and propose a sustainable plan for everyone here. Balancing between tourism and local residents. Tourism should profit locals and not negatively impacting them.

Download the full report today for more details, or directly contact PwC for more information. © April 2018 PwC. All rights reserved.

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