CEE’s hotels doing even better

The report finds that Belgrade is the city with the lowest key performance indicators, but driven by a jump in occupancy, RevPAR grew by 8.2 pct over 2016, albeit at the expense of the ADR. Over recent years, the strong growth in room supply has put downward pressure on trading. Yet, with a positive performance in 2016, the market appears to be absorbing this supply and hoteliers should now be able to raise their ADR.

Strong overall economic growth and the 2016 EU presidency fuelled demand for hotel rooms in Bratislava. In fact, since 2011, arrivals and overnight stays have increased exponentially by 59.5 pct and 62.4 pct respectively, while hotel room supply remained almost stable. With both occupancy and ADR having improved, the city saw the highest RevPAR growth in 2016 at 20.8 pct. But because the EU presidency moved to Malta at the beginning of 2017, RevPAR growth is likely to decelerate this year.

Christie & Co considers Bucharest to be the rising star among the cities under review: in the recent years, it has won a reputation as an attractive meetings and events destination. This, together with improvements to the city’s architecture, has resulted in strong demand with an improvement in all key performance indicators. RevPAR rose by 10.8 pct in 2016 with the trend expected to continue into 2017.

Budapest is one of CEE’s most important economic hubs with strong international demand for hotels: In 2016, 90 pct of all overnight stays were generated by foreign visitors. Overall, all key performance indicators are rising with both rising national and international demand. New hotel operators are also expected to enter the market.

Prague remains the largest hotel market in the region, with the highest occupancy, ADR and RevPAR rates in the region. Last year marked an all-time high with 14.7 mln overnight stays, of which just over 90 pct comprised foreign visitors. While the pipeline is full with new brands entering the market, which may have an impact on performance, the city still proves attractive to business and leisure tourists and hoteliers alike and is likely to continue to be the region’s best performing market.

In Warsaw the number of hotels and guestrooms has been on the increase since 2011 and the city’s pipeline continues to be strong. In contrast to other CEE capitals, branded hotels account for the majority of the total supply (64 pct). The increase in supply, however, could be easily absorbed by strong demand growth, which increased by 30.1 pct in arrivals and 34.8 pct in overnight stays over 2016 leading to improved ADR and RevPAR on the city market. The market is looking ever more attractive to foreign investors.

“Hotels located in the CEE’s capital cities have had an incredibly successful 2016 with cumulative RevPAR growth in excess of 10 pct, outperforming many other capitals in neighbouring regions of Europe. Tourism is booming and underpinned by strong economic indicators, the region’s hoteliers expect this positive trend to continue. Hotel investors are taking note and increasingly looking to unlock value in CEE capitals. The prospect of hotel assets with higher yields, increasing tourism demand and significant economic growth are proving to be highly attractive for a wide range of international investors. Early adopters are positioned to benefit from an upswing in these relatively immature investment markets,” said Marvin Kaiser, a senior consultant responsible for investment and letting at Christie & Co.