Tourism is widely recognised as a tool for economic development and an excellent source of revenue. The EU is advantaged by its wide selection of cultures, countries and cuisines, thereby maintaining its leading position as the world’s main source and destination of international tourist flows. Six of the world’s top 10 tourism destinations for non-domestic arrivals are in Europe: France, Spain, Italy, the UK, Austria and Germany.

Overall, in 2004, European tourism directly produced 5% of European GDP – and indirectly produced 12%. According to the World Trade Organization (WTO) Barometer January 2004, the European Travel & Tourism Action Group (ETAG) and the EU, the industry created €249.2bn in revenues in 2003: 6.6% of EU exports and 30% of external trade in services.

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The importance of tourism is also shown by the amounts of expenditure and receipts that are transferred among the EU countries and among each EU country with the rest of the world. In that regard, Europe holds eight of the top 10 destinations by receipts: Spain, France, Italy, Germany, the UK, Austria, Turkey and Greece. The WTO Barometer January, June 2004 indicates that Europe represented 61.5% of the market share of global tourism for arrivals and 54.5% for receipts.

 Job creation

 The industry is a big employer. About 6.8 million people are directly employed in tourism and 20 million indirectly. Tourism is also seen as a big opportunity for job creation, especially in less developed and peripheral regions. Some sources estimate that travel and tourism jobs will increase by two million during the next 10 years.

Such statistics directly affect Europe’s hotel industry and influence future hotel investment. The Hotel Benchmark Survey by Deloitte & Touche LLP found that 2004 was a better year for European hoteliers: the industry reported eight consecutive months of revenue per available room (revPAR) growth on 2003. Preliminary data reveals that revPAR across Europe grew by 6.6%, reaching €71 during the first nine months of 2004 compared with the same period in 2003.

Improved occupancy levels, due to an increase in corporate travel and price discounting, have fuelled this growth.

Markets in the eurozone showed weaker revPAR growth than their non-eurozone counterparts, however. Hotels reported only a small increase in revPAR of 3.6% to reach an average of €70 for the first nine months of 2004 compared with the same period of 2003. The markets driving the European recovery are mainly eastern Europe, Greece, Portugal and the UK.

 UK developments

 London hotels lead the pack for the highest hotel occupancy rate since September 2000, according to research by Deloitte & Touche. The Hotel Benchmark Survey shows occupancy levels reached 83% in September. The UK also maintains its leading position in Europe for single-asset investment. The regional UK market has been dominated by two hotel sales in Manchester: the 303-room Midland Manchester and the Radisson SAS Manchester Airport.

New construction is also under way. A multi-million luxury hotel by Park Plaza Hotels Europe is on schedule to open this year in Cardiff. The hotel is the company’s latest development in its £300m UK investment programme.

Sheffield, in the county of South Yorkshire, may soon become the UK’s own Las Vegas, depending on which company wins the bid to build a leisure complex there. The British government’s proposed gambling laws, if passed, would allow eight “super casinos” to be built in the UK.

US entertainment giant MGM Mirage and British Land have proposed a £180m leisure complex in Sheffield. Up to 6500 jobs would be created in the building and running of the site.

Tim Wells from British Land regards Sheffield as an excellent location. “Sheffield is widely recognised as one of the most vibrant cities in the UK, yet there is much potential to be realised,” he says. “Given the scale of investment in this development and its proximity to local facilities and transport links, this scheme will make a huge contribution to the regeneration of Sheffield.”

 Buying and selling

 Throughout Europe, the market for buying and selling hotel portfolios has been exceptionally strong. Jones Lang LaSalle Hotels reports that the most significant portfolio deal in 2004 was the £1.1bn sale of the 772-key Savoy Group (including Claridge’s, the Connaught and the Berkeley and Savoy hotels in London) to Quinlan Private, an Irish-based consortium of high net-worth individuals. The deal equated to about £1.44m a key, the highest price ever paid for a hotel asset in the UK.

The largest such transaction in mainland Europe was the public-to-private sale of Pandox to Swedish company APES Holding AB. Pandox is one of the leading pure hotel property companies in northern Europe.

Although the hotel industry remains predominantly domestic in its ownership, a growing number of investors from other countries are purchasing hotels in Europe. Transactions in 2004 included the Irish Quinn Group’s acquisition of the Hilton Prague; the Middle Eastern investor Olama Sultan Mohamed Sharif’s purchase of the Hotel Diana Park in Torrequebrada, Spain; and a Swiss buyer’s purchase of the Steigenberger Kurhaus Hotel in The Hague, Netherlands, reports Jones Lang LaSalle Hotels.