After a year of robust recovery in occupancy rates and room prices, almost half of European hoteliers are anticipating 2023 to generate the highest revenue ever recorded. At Booking.com, we know our success is intrinsically linked to the success of our partner hotels, resorts, guest houses, B&Bs, vacation rentals, and various other types of travel lodgings. And we are thrilled to learn from them that travel is finally back!
Booking.com partnered up with Statista Inc. to bring you the second edition of the European Accommodation Barometer, shedding light on the latest economic performance, challenges, and expectations of hoteliers across Europe.
This comprehensive survey, encompassing responses from over 1,000 participants, provides a valuable insight into the prevailing sentiment within the industry. It could serve as a tool for decision-making or policy formulation. Barometer mirrors the hopes and fears of European hospitality professionals — women and men who work hard to delight their guests and offer unforgettable experiences.
Stakeholders within travel & tourism and beyond are eagerly awaiting a rebound, given the size and importance of our sector. After all, in 2019 — the last pre-pandemic reference year — travel & tourism was responsible for over 22 million jobs (11.2%) of the EU’s total workforce and contributed €1,3 trillion (or 9.5%) to the bloc’s economy. But what shape will the recovery take? Can the sector outpace the average GDP growth rate again?
1. Hard times don’t last forever
Breathing a sigh of relief after a few tumultuous years, the majority of hoteliers view the recent past in a positive light. In fact, the overall sentiment is nothing short of extraordinary! For every accommodation in Austria that assessed the developments over the last six months as poor, there were 81 who thought they were good or very good. Even for countries with a lower ratio, like France and Greece, the celebratory mood eclipsed the pessimism six to one.
While positive trends are observed across Europe, there are regional disparities. Spain, Portugal, Austria, and the Nordic countries are more optimistic about the current state of affairs and future outlook, while France, Italy, and Greece have more subdued assessments.
Assessing the next six months, every second travel property in Europe is feeling cheerful. One-third are neutral, and only one in ten is feeling gloomy. Portuguese hoteliers are the most optimistic about the future, having seen some of the strongest growth in occupancy and room rates.
Spain and Greece expressed the most upbeat revenue outlook, reflecting their popularity among summer vacationers. More than others, the beach and seaside establishments expect 2023 to be a record-breaking year. Tellingly, 57% of accommodations see the increased appreciation for travel as a significant business opportunity. And, to top it all off, occupancy levels and room rates have increased for the majority of European accommodation businesses over the past six months.
2. Government policies
Accommodations across Europe recognize the importance of government policies vis-a-vis their business success. Even in countries where this sentiment is a bit more subdued, like France, UK, and The Netherlands, the ratio of respondents who believe that policies matter is two to one versus those who do not.
There is less of a consensus when it comes to the impact of the said government policies. Hoteliers in Italy, Germany, Austria, and Grece still view them as mostly harmful. At the same time, their counterparts in Portugal, The Netherlands, and the Nordics consider government policies to be beneficial as far as their expected net impact.
While Covid-19 and travel restrictions are becoming less significant concerns, energy costs remain the top challenge for the accommodation industry. Furthermore, the survey respondents are worried about the macroeconomic conditions, staffing, and rising costs of inputs. Overall, the perception of challenges the industry faces has increased compared to the previous Barometer.
Infrastructure investments have been identified as a top priority, but European hoteliers also envisage a prominent role for their governments in the area of labor upskilling, investments in destination marketing, and digitalization of government services.
3. Challenges faced by individual and chain hotels
The survey reveals significant differences between individual hotels and chains, with independently managed properties facing greater challenges across all metrics covered in the accommodation barometer. They encounter more difficulties accessing capital; plus, their occupancy and room rates have seen slower growth.
Chain businesses are feeling bullish: around two-thirds (64%) anticipate a positive or very positive development in the next six months, up from 42% in 2022. Furthermore, the expectations for future performance are also higher for chain businesses compared to independently-managed establishments. Larger hotels and those with higher star ratings are in a better position than smaller ones with lower star ratings.
4. AI adoption
In the second edition of the European Accommodation Barometer, we introduced a question on AI, given its newly found prominence. By leveraging machine learning and artificial intelligence, hoteliers can streamline operations, improve guest experiences, and drive revenue growth. But the current rates of AI adoption are low. Perhaps, this reflects the very essence of what it means to host guests and to run a hotel: a human-experience-centric business at its core.
When it comes to the adoption of AI, hoteliers in the Nordic region were the most invested, with 13% saying they use it already. In The Netherlands, 32% of hoteliers were keen to start deploying AI in the next six months.
5. Onwards and upwards
As the old saying goes, knowledge is power. At Booking.com, we understand the importance of giving voice to key players in the European accommodation industry. Our goal is to generate insights and empower decision-making by our stakeholders, be they governments, parliaments, researchers, opinion leaders, travel sector financiers, or hoteliers themselves. Fortunately, there is reason for optimism. Europe’s accommodations are hopeful about their prospects, and the recovery is gathering speed. Given the vital importance of the travel and tourism sector to Europe’s economic success, we can all celebrate this remarkable comeback.
