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Best placed to grow
Europe has the biggest hotel and travel market in the world, but its cities and its hotel markets are undergoing change. Countries
and cities alike are being buffeted by new economic, social, technological, environmental and political currents. Europe has
already begun to feel the winds of change as the old economic order shifts eastwards and economic growth becomes more elusive.
While some cities struggle, hotel markets in other, often bigger and better connected cities prosper. For many countries provincial
markets have been hit harder than those in the larger cities.
In this report we look forward to 2012 and ask which European cities’ hotel sectors are best placed to take advantage of the
changing economic order. Are these the cities of the so called ‘old’ Europe or the cities of the fast growing ‘emerging’ economies
such as Istanbul and Moscow? What will be driving the growth? What obstacles do they face? Will the glut of new hotel rooms built
in the boom years prove difficult to digest?
The 17 cities in this report are all important tourist destinations. Some are capitals or regional centres, some combine roles as
leading international financial and asset management centres, transportation hubs or tourism and conference destinations. Some
like London and Paris are major economies in their own right, of a size larger than medium-sized national economies such as
Sweden or Switzerland. We have provided some city rankings for comparison, but of course it’s not just about growth rates. Each
city operates at differing levels of maturity and profitability and they are all at different stages in the hotel cycle, reflecting wider
global and domestic macroeconomic drivers as well as demand elements specific to that city.
This report combines PwC’s* recognised econometric forecasting and macro-consulting expertise with its extensive hotel and
travel capability across Europe. We have forecast the outlook for demand, average daily rates (ADR) and revenue per available
room (RevPAR). The economic forecasts were generated based on PwC’s own economic forecast scenarios (September 2011).
Details of the method and assumptions used to compile the forecasts can be found in the appendix. We have used a variety of
reputable statistical sources which include: hotel benchmark data series and supply data from STR Global; other supply and
tourism data from national tourism organisations, Lodging Econometrics, Euromonitor International and other commercial
sources; and economic data from Eurostat, Turkstat, National Central Banks and Thomson Reuters DataStream.