European Lodging Execs See Lower Demand, Bankruptcies Ahead

European hospitality executives are bracing for lower levels of business travel, widespread risk for chain bankruptcies and no near-term end to the financial downturn, according to DLA Piper's 2009 Europe Hospitality Outlook Survey, released this month.

The survey, based on responses of 261 top executives in the European hospitality industry, showed that almost 70 percent of respondents reported seeing a significant reduction of business travel amid the downturn. An even greater majority, 83.9 percent, described their industry outlook as bearish, while only 5.4 percent reported a bullish outlook. Additional, a plurality of respondents, 43.7 percent, said the current recession has had the biggest impact on revenue per available room, more than recessions in the early 1980s, 1991 and 2001.

Just more than half of the executives surveyed said they expect to see no rebound until 2011, with just under 40 percent expecting a rebound in 2010. By comparison, U.S. data shows that 59 percent of executives expect a rebound in 2010, according to the survey. "We Europeans are less optimistic and more cautious than our U.S. counterparts about the speed of recovery from the current downturn," Karen Friebe, global co-chair of DLA Piper's hospitality and leisure group, said in the report.

Most executives also expect to see hotel chain bankruptcies during the next year. About 39 percent said one to five chains would file for bankruptcy, 23 percent said five to 10 chains would go under and almost 17 percent said they expected that number to be more than 10. Only 6.5 percent of respondents expect no bankruptcies within the next year.