European hospitality industry survey 2021

1. Hotel industry sentiment

Disruption and recovery

Distressed activity

While over a third of our respondents do not expect to see distressed activity in the short term, 42% expect it to emerge in the first half of 2022 and 16% in the second half of 2022.

Top priorities

The hospitality sector is not just focused on recovery but also on growth in the next 12 months.

In terms of learnings from the pandemic, the hospitality leaders in our survey ranked the ability of their staff to adapt, reskill and assume new roles as the most important factor helping their organisations to navigate future disruption.

Investment opportunities 

Assets with a focus on sharing experiences such as co-working, co-living, student housing and hostels continue to be less attractive for investment in 2022, with only a total of 14% of respondents rating any of these categories as attractive.

Risks for the next five years

The hospitality leaders in our survey expect the main risks for the European and UK hospitality sectors for the next five years to relate to talent and the ongoing impact that the COVID-19 pandemic might have on predictability of demand. The impact of the pandemic is expected to be a bigger risk for the European sector, than for the UK. The increased staff costs has particularly risen as an important risk in this year’s survey, with the share of respondents selecting this for the UK sector surging from 9% last year to 59% and from 6% to 38% for the European hospitality sector.

Climate change action 

While climate change action is seen to be appreciated by shareholders and stakeholders, less than half of our respondents think consumers are willing to pay more for sustainable products and services.

2. Focus sur l'Europe

Top 10 European cities for investment

Amsterdam narrowly holds on to the top position for the 6th year in a row as the most attractive European city for hotel investment in 2022. While London is seen to remain resilient holding on to its second place, Madrid has jumped from 10th place to third place in 2022. Lisbon and Barcelona have become more attractive to hotel investors, climbing up two places, and are now fourth and fifth in the ranking, ahead of Paris.

Financing the European hotel market

Private Equity investment remains the preferred source of equity capital for hotel acquisitions in Europe but real estate funds and REITs as well as hotel funds are expected to feature more strongly in 2022.

• Almost three quarters of the respondents (74%) expect hotel investment to come from domestic sources within Europe. Increased investment activity is expected from the UK (42% up from 30%) and North America (54% up from 50%).
• 72% of respondents view senior bank loans as the most common source of debt financing but real estate asset managers and direct lenders are expected to increase in importance (increased from 40% to 59% and 30% to 42% respectively compared with the previous year).
  

European outlookand investment cycle

Hospitality leaders in our survey predict UK (45%), Spain (42%), Greece (38%) and particularly Portugal (49%) to be in an upturn in 2022.