Europe led the global regions in terms of hotel occupancy
and average daily rate growth during the second quarter of 2016, according to
STR. But industry results and commentary from the recent round of earnings
calls indicate occupancy is flattening out and average daily rate growth pace is
also slowing.
In Europe, occupancy crept up 0.6 percent year over year to
73.9 percent and ADR increased 2.1 percent to €114.33. Asia/Pacific pegged the
largest year-over-year occupancy growth, up 1.3 percent to 68.3 percent, but ADR
declined 1.1 percent to $96.95. The Americas region reported a 0.4 percent
increase in occupancy to 68.7 percent and a 2.2 percent ADR increase to
$123.88. In the Middle East and Africa, occupancy decreased 5.5 percent to 62.9
percent and ADR fell 3 percent to $169.99.
Pressures from weak corporate transient demand and
geopolitical instability weighed on results during the second quarter, and
major hoteliers, including Marriott International, Hilton Worldwide and Hyatt
Hotels Corp., revised down their full-year growth projections in revenue per
available room.
Europe in Detail
Terror events precipitated declines in travel to Turkey,
France and Belgium. In Turkey, occupancy plummeted 23.9 percent year over year
to 51 percent and ADR fell 17.2 percent in local currency terms. France, which
hosted the 2016 UEFA European Championship from June 10 to July 10, still saw
declines in occupancy, 5.5 percent to 68.2 percent, and ADR, 7.5 percent to €138.43.
Brussels experienced a staggering 28.3 percent decline in occupancy to 56.5
percent and a 0.7 percent drop in ADR to €114.49. Transient demand for the
Brussels market was also down 28.1 percent in the market after the March terrorist
attack.
As the United Kingdom's vote to leave the European Union
didn't occur until late June, STR analysts said it's "too early to quantify
the impact on U.K. hotels and the European hotel industry as a whole." The
U.K. saw occupancy decline 0.7 percent to 78.9 percent and ADR rise 1.7 percent
to £89.71. InterContinental Hotels Group said continued supply growth
contributed to a RevPAR decline in London, in particular. Hilton attributed
weak London performance to soft corporate transient demand.
"Going forward, we expect Brexit and other recent
events in Europe to increase uncertainty and potentially hurt demand across the
broader region," said Hilton CFO Kevin Jacobs.
Berlin experienced a 1.1 percent increase in occupancy to
81.2 percent, but a 1.1 percent decrease in ADR to €78.72. Yet, Marriott and
IHG characterized Germany as a bright spot for the region overall, with both
companies seeing a 9 percent year-over-year gain in RevPAR. Marriott also saw
RevPAR increases in Spain, benefiting from tourists who would have gone to the
Middle East in the past.
For the first half of the year, Europe reported a 0.7
percent increase in occupancy to 67.6 percent and a 2.2 percent rise in ADR to
$118.31.
Americas in Detail
Positive results in North America offset weakness in Latin
America and the Caribbean as a result of concerns over the Zika virus in the
Americas region during the second quarter.
Occupancy was nearly flat year over year in the region
overall (up 0.6 percent to 69.2 percent), as well as in Canada (up 0.4 percent
to 67.1 percent) and Mexico (down 0.5 percent to 63.3 percent). North American
ADR rose 2.6 percent to $123.87. In Canada, ADR increased 2.5 percent in local
currency terms, and in Mexico, ADR climbed 15.8 percent in local currency
terms. In the United States, hoteliers reported positive results in Los Angeles
and Atlanta, however, low oil prices continued to weaken performance in
Houston.
In Latin America and the Caribbean, occupancy decreased 5.1
percent to 54.1 percent, while ADR rose 5.3 percent to $89.75. Brazil saw
occupancy drop off 7.8 percent to 51.6 percent and ADR fall 3.6 percent in
local currency terms. Beyond Zika concerns, STR analysts attribute declines in
performance to the country's economic downturn and oversupply in the hotel
market ahead of the Summer Olympics.
For the first half of the year, Americas occupancy dipped
0.2 percent to 64.6 percent and ADR rose 3.2 percent to $122.57.
Asia/Pacific in DetailIn Asia/Pacific, hotel results were mixed country-to-country
during the second quarter. Marriott and Hyatt both saw positive year-over-year
rebounds in South Korea after last year's MERS outbreak. Seoul posted a 13.1
percent rise in occupancy to 77.3 percent, but a 1.3 percent decline in ADR in
local currency terms, according to STR.
Hilton and Hyatt reported RevPAR gains between 4 percent and
5 percent in mainland China, with Marriott reporting particular strength in
Shanghai and Beijing. In Hong Kong, Hyatt reported strong group business at its
hotels, while Marriott saw "modest growth" in RevPAR and Hilton saw a
5 percent year-over-year dip.
In Japan, Hyatt saw negative demand at its hotels, something
CFO Patrick Grismer attributed to the strengthening of the yen. Hilton saw a
drop-off in transient business in the market. Conversely, IHG said it saw an
increase in international visitors and domestic demand, with RevPAR at its
hotels in Japan climbing 7 percent year over year. According to STR, Tokyo
reported a 2.3 percent decrease in occupancy to 84.5 percent, but an 8 percent ADR
increase in local currency terms.
Australia posted increases in both occupancy (2 percent to
73.4 percent) and ADR (1.8 percent, in local currency terms), thanks to demand
growth outpacing supply growth. RevPAR growth in the transient segment (5.7
percent) has also been moving ahead of the group segment (down 4.5 percent),
which is somewhat atypical given the recent slowdown in transient demand around
the globe.
For the first half of the year, Asia/Pacific occupancy
increased 1.4 percent to 67.4 percent, while ADR decreased 0.4 percent to
$93.55.
Middle East &
Africa in Detail
Geopolitical instability and low oil prices have challenged
results in the Middle East and Africa, but the earlier timing of Ramadan gave a
boost to some hotels in the region during the second quarter. Hilton reported
an 8.1 percent year-over-year RevPAR increase but is forecasting a decline for
its full-year results. Marriott, meanwhile, saw lower occupancy rates in the
region and cited oversupply as a negative influencer in its second-quarter
results.
For the first half of the year, Middle East and
Africa occupancy fell 4.9 percent to 61.2 percent, while ADR declined 1.9
percent in local currency terms.