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Strong Growth in Hotel Spending as Visitors Return to Europe

- UK, France and Germany lead the recovery, while Spain and Italy lag


News provided by

American Express Business Insights

09 May, 2011, 23:01 GMT

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LONDON, May 9, 2011 /PRNewswire/ -- The European hotel industry is showing steady signs of growth, although it is yet to recover to pre-downturn levels, according to data released today by American Express Business Insights, the data analytics and consulting arm of American Express.

Overall hotel spending in Europe grew 7 percent in 2010, with a further 4 percent growth in the first quarter of this year. Growth has been driven by tourists from outside of Europe returning to the region, increased spending in luxury hotels and a rebound in business travel. Generation Y travellers, those in their 20s, have proven to be particularly resilient. They largely defied the downturn and are showing a clear appetite for luxury spending.

The insights, presented today at a gathering of senior executives in the hospitality industry in London, provide an in-depth look into the state of the hotel sector across the major European markets. Spending was analysed for the UK, Italy, Germany, France and Spain, from before the downturn in 2007 to the end of the first quarter in 2011.

The UK hotel sector led spending growth in Europe in 2010, growing at a healthy 10 percent, followed by France (7 percent) and Germany (4 percent). None of the markets has returned to pre-downturn levels. However, the UK, France and Germany are almost back to 2008 spending levels. While Spain (8 percent) and Italy (4 percent) also grew in 2010, they were hit harder by the downturn and have further to go before they recover to 2008 levels.

Sujata Bhatia, Vice President for American Express Business Insights Europe and Asia, explains that a rebound is taking place in the hotel sector across Europe. "Visitors to Europe drove double digit year-on-year growth in 2010 and business travel grew by 10 percent across the region over the same period. Furthermore, we saw spending growth amongst luxury leisure travellers increase by 9 percent across Europe in 2010."

"This strong growth is great news in an environment where consumer confidence remains low and economic growth fragile," said Bhatia. "This is particularly true in the UK, where international visitors are spending again, making a significant contribution to the UK's economic recovery. It will be interesting to see how heightened global interest in the UK, with the Royal wedding, Queen's Diamond Jubilee and the 2012 Olympics, impacts the sector."

KEY FINDINGS

After a large drop off, tourists from outside Europe return

The analysis found that visitors to Europe are an important driver of the recovery - in short, tourists are back. Representing one-third of all leisure travellers, spending by non-European tourists declined more sharply than European travellers, but their rebound has been impressive. Visitors from outside the region drove double-digit growth in spending across every market in 2010 compared to 2009, taking them back to 2008 absolute spending levels. On average they spend 88 percent more per trip than European tourists.

Italy saw the greatest growth from non-Europeans (15 percent), followed by Spain (14 percent) and France (13 percent). The UK and Germany grew at a slightly slower rate of 12 percent. In comparison, the overall growth in spending by European tourists was only 1 percent in 2010.

In the first quarter of this year, overall growth in spending by non-European tourists remained strong at 12 percent. In the UK it was 9 percent, a promising sign for the peak summer season. There was no growth in spending by European travellers in the same period.

In 2010 the most popular holiday destinations for European and non-Europeans alike was France, followed by the UK. Interestingly, France overtook the UK to become the most popular holiday destination in 2009.

Luxury is back in a big way

In a positive sign for the European economy, there has been significant growth in spending at luxury (5 star) hotels. On average, spending at luxury hotels grew by 9 percent across all markets in 2010, while spending at upscale (4 star) and midscale (3 star and below) hotels only grew at 3 percent and 2 percent respectively. In the UK, both luxury (10 percent) and midscale (7 percent) are seeing strong growth.

One reason for the growth in the luxury category is likely to be the number of high-profile new luxury hotels which opened in Europe over the past 12 months.

Business travel increases across Europe

The importance of business spending to the sector can't be underestimated. Business travellers currently represent one third of all travellers across Europe and almost 50 percent of travellers in Germany. In 2010 spending by business travellers increased by 10 percent across Europe, with a further 4 percent growth in the first quarter of this year. This was largely driven by an increase in the number of travellers, rather than an increase in average spending.

"While not yet back to pre-downturn levels, business spending in hotels dropped off more slowly and rebounded more quickly, showing how vital business travellers are to the hotel industry," noted Bhatia. "We are watching with interest to see if the virtual management strategies adopted in the downturn will have a lasting impact on business travel."

Generation Y has a taste for luxury

Generation Y travellers (those in their 20s) represent an interesting emerging target market for hoteliers, says Bhatia. "While the Gen Y traveller represents a relatively small segment, they largely defied the downturn, their wallets are growing and they already exhibit the behaviour of premium spenders."

Generation Y travellers are spending 20 percent more on lodging today than they were before the downturn and, in the first three months of this year, they spent 24 percent more on hotels compared to the same period last year. More than half of Generation Y travellers stayed in a luxury or midscale hotel. Their most popular destination choices were the UK, France, and Italy.

About American Express Business Insights

As part of the Global Merchant Services organisation within American Express Company, American Express Business Insights provides in-depth, actionable insights into consumer and business spending at the business, industry and geographic levels, leveraging proprietary transaction data from the American Express network of approximately 90 million cards in force across over 125 markets.

About Sujata Bhatia

Sujata Bhatia is the vice president for American Express Business Insights Europe and Asia. Sujata comes from a business and finance background. A Certified Public Accountant, she worked at Ernst & Young, Goldman Sachs and Bain & Co ahead of joining American Express in 2004.

    
    For further information, please contact:
    American Express                         kwittken + company
    Todd Beavis                              Caleb Hulme-Moir
    Telephone: 012-7321-8282                 Telephone: 020-7259-1776
    or 07850-326-876                         or 07866-707-262
    Email: todd.a.beavis@aexp.com            Email: chulme-moir@kwitco.com

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