- Substantial effects of the pandemic are expected to affect European hotel performance in 2021
- European accommodation turnover to surge by 28% in 2021
- Hospitality industry will be among the last to recover from the pandemic
For the European hospitality industry, substantial effects of the pandemic are expected to affect its performance in 2021. According to the latest research data, revenue could slump by as much as 50% during the year.
Based on an HVS report, the sector’s transaction volume fell by 69% in 2020 to €8.5 billion down from a peak of €27.1 billion in 2019. The figure was, however, higher than the €3.1 billion recorded in 2009 following the Global Financial Crisis.
European Accommodation Turnover to Surge by 28% in 2021 Yet Remain 39% Below 2019 High
A study attributes its potentially dismal forecast to the fact that the hospitality industry will be among the last to recover from the pandemic. Travel restrictions and social distancing are some of the factors taking a toll on the industry’s performance. It forecasts that in the next few years, business travel could fall by as much as 10% to 30%.
More than 48% of the European hotel industry’s annual transaction volume in 2020 was recorded in the first quarter. Transaction volume in January and February alone was €2.7 billion, 2.5% higher than in 2019. As a result of the pandemic, the number of transactions fell by 66% to 291 for the whole year.
While stakeholders have been hoping for a rebound this summer, travel restrictions make the outlook rather bleak. According to Allianz analysts, the European independent hotel sector will only regain a quarter of its 2020 declines this summer.
If restrictions remain through summer, Goldman Sachs projects that Southern Europe will lose up to 1.3% of its GDP growth. However, with the region progressively lifting restrictions, demand should rise significantly. Annual accommodation turnover for 2021 could rise by 28% in Europe according to Euler Hermes. But it will still be around 39% lower than the 2019 high.