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Edinburgh, Glasgow and Manchester are amongst the “key” European cities well positioned for hotel performance recovery, according to a study by global real estate advisor CBRE.
According to the real estate company, markets with material exposure to leisure demand and a lower reliance on both international travel (particularly long-haul) and meetings, incentives, conferences and exhibition (MICE) demand are “best positioned for a more rapid recovery”.
CBRE said domestic travel will be the first to see a return of activity. According to the report this will be predominantly supported by the gradual reopening of economic markets alongside the lifting of some travel restrictions.
In 2019, 63% of tourism spend across Europe was from the domestic travel market, highlighting its importance in the sector.
The report also revealed Germany, the United Kingdom and Italy have the highest share of domestic tourism spend. Resulting in them to be well positioned for a “more immediate recovery”, notwithstanding the economic effect of Covid-19 at a country level and the consumer perception of risk which will differ by destination.
Leisure travel is likely to see an immediate surge in demand, particularly staycations. Countryside and rural hotels across Europe are expected to benefit from this trend first, as travellers will initially seek to avoid densely populated locations.
The growth rate of corporate demand has been lower than the growth rate of leisure demand over the last decade, and whilst corporate travel will return as economic activity resumes, CBRE said it expects it to be limited and to remain below ‘normal’ levels for the short-to-medium term.
According to the report, international MICE is likely to be the most-impacted segment and will take the longest to recover within the hospitality sector.
Joe Stather, associate director of hotels at CBRE said: “Previous demand shocks in the hotel market show us that not all customer segments are impacted to the same degree, or indeed follow the same trajectory in terms of recovery.
“We anticipate that markets across Europe which have previously benefited from strong domestic leisure demand are well positioned to lead the recovery cycle.”
