Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting to read:%0A%0A {0} %0A%0A {1}

COVID-19 Impacts on European Hospitality

Bořivoj Vokřínek • 08/03/2021

european hotel market 2020

Due to the COVID-19 pandemic, the European hotel market recorded an unprecedented RevPAR decline in 2020, down by 70% to approximately €24, based on STR dataExternal Link. This was driven by a nearly 63% fall in occupancy to 27%, while ADR dropped by 18% to €92. 

According to HotStats External Link, the profitability of hotels in Europe declined by 101%, with GOP per available room at EUR -0.71. This made Europe the only region where hotels did not break-even, despite a relatively good January and February in 2020, along with some signs of recovery during summer, when travel restrictions were partially lifted across most markets. 

Understandably, hotel transaction volumes in the region declined considerably, by 63% compared to 2019. However, there were still over €10 billion of deals closed in 2020. Investors seem to remain optimistic about the medium to long-term prospects of the industry, with major transactions still taking place and deals continuing to be agreed on.

As revealed in the recent Europe Hospitality MarketBeat 2020, the UK saw the highest volume of deals closed in 2020 at €2.3 billion, even though this was a -58% decline from 2019. This was followed by Germany at €1.8 billion (-64% decline from 2019) and Spain at €1.2 billion (-20% decline from 2019).

Among the least impacted major markets were Sweden, Switzerland, Greece, Portugal and Spain. Sweden in fact saw a slight increase in transaction activity, up by about 5% compared to 2019.

In 2020, the European hotel market recorded nearly 400 transactions, comprising about 48,000 rooms – of which almost 43% of the deal volume was committed to after the pandemic outbreak. 

In particular, a few transaction characteristics have been observed in the last year:

  • Investor Origin: Given the uncertainty caused by the pandemic, 2020 saw a marked increase in investors retreating to more familiar ground, with European investors accounting for a large majority of transaction volumes in the region (83%).
  • Investor Type: Institutional investors, who are better positioned to ride out such crises, led the transaction market with nearly half (48%) of total volume. These investors are typically better capitalised, more able to weather temporary troughs, and tend to have a longer-term investment strategy.
  • Project Stage: Over a quarter (26%) of deal volume in 2020 was in development or conversion projects instead of operating assets, compared to 12% in 2019. Investing in projects that do not face the risk of requiring immediate capital injections to keep operations afloat is attractive for investors looking to buy assets that will be operational when the market returns. One example was the acquisition of the EDITION Madrid by Archer Hotel Capital for over €220 million, which is expected to open in 2022.
  • Location Type: One-third of transaction volume in 2020 was outside urban locations. However, when including only deals committed after the virus outbreak, the share of non-urban locations increased to over 41%. This may imply investors’ expectations of a quicker recovery and/or better long-term prospects for hotels driven by leisure demand that are typically located outside major cities. Unsurprisingly, there was a notable decline in acquisitions of airport hotels, down by 87%.


What's Next

In the near-term, restrictions are expected to remain during H1 2021 in Europe, with hopes for hotel performance recovery to start in H2. The hospitality sector is expected to quickly gain momentum as vaccination rollouts continue to advance – although markets that depend on business and international travel will be prone to a slower recovery. Nonetheless, with operational efficiencies and more flexible business models—all of which have been accelerated by the pandemic—hotel real estate continues to be an attractive asset class which should remain on investors’ radars. After all, the hotel industry is unique in that, for the most part, there is no viable virtual pivot for travel and tourism – there will always be a need for hotel accommodation.

28 May 2020

Recovery Readiness: Re-Opening Hotels 

The impacts of COVID-19 have been felt far and wide across industries around the world, and especially so for the travel and tourism industry. As the hospitality sector reels from the effects of this global pandemic, the million-dollar question has shifted from simply “when will we recover?” – to exactly “how will we recover?” 

On May 13, Cushman & Wakefield’s hospitality team held an exclusive webinar External Linkfor its clients, addressing the first of many steps to recovery – planning for the re-opening of hotels. As we prepare for what is likely the largest-scale rapid re-opening of hotels in modern history, it will certainly be more complicated than putting up the ‘Open for Business’ sign – so what are the key considerations in this process? With the challenges but also opportunities that have presented themselves amidst this crisis, what could be in store for the future of our industry? 

There’s more to it than meets the eye  

Even as countries around the globe begin to relax some restrictions, the rules on who can travel in and out, from when and under what conditions remain fairly unclear and subject to change. With many markets across Europe relying on international travel, it comes as no surprise that the audience agreed in a poll that two of the biggest roadblocks is estimating when and how demand will pick up and the lack of clarity when it comes to government restrictions. And, as if this uncertainty were not enough, it seems that the road to recovery will not be a smooth one. In fact, rather than a steady gradual occupancy increase, hoteliers may be in for a roller-coaster ride. As revealed by Stefan Leser External Link, CEO of Langham Hospitality Group, notable highs and lows in performance can be a challenge to running an efficient operation after re-opening, with some of their properties in China recording strong peaks during the major holidays with occupancy levels up to 70% in city hotels and reaching near full-capacity in resorts, but then quickly falling to as low as mid-20% within a few days. Therefore, it is important that hotels remain vigilant about managing costs, even if recovery may seem to be in sight. Desmond Taljaard External Link, Managing Director at L+R Hotels, even described how some hotels have had to ‘yo-yo’ between opening and closing up to 4 times over the last 7 weeks, due to unpredictable needs and demand. As Leser explained, one of the biggest challenges is “making sure that the losses are not greater when you are operating than when you were closed”.  

Source: Cushman & Wakefield Research (based on 104 responses of the webinar attendees.) 

Evidently this crisis has been like no other and the coordinated efforts of the various stakeholders will remain key. This includes not only the owners, operators and banks, but also suppliers and authorities. As Elias Hayek External Link, Head of Global Hospitality and Leisure at Squire Patton Boggs cautioned, pre-agreements need to be established; supply chains must be secured as many hotels re-open at similar times, and owners and operators should lay out the detailed cost implications and responsibilities that will be incurred by the re-opening. With how hard and fast the hotel sector was impacted, many hotels may have closed in what Elias Hayek coined a “knee-jerk reaction” to the crisis, without having had much time to consider the parameters and relationships that would be affected during the closure period and by the closure itself. But as the industry now anxiously looks to recovery, these are certainly important details that should not be overlooked. 

Unsurprisingly, the specificities of each hotel will also play a significant role in the shape of recovery. Regional or domestic demand-driven destinations will likely pick up more quickly; select-service hotels will probably make a comeback before more upscale hotels; while business and conference hotels may face greater challenges. Finally, the timing of the re-opening also has to be in line with seasonality – re-opening in the middle of a low season could incur more costs than revenues.  

Which roads lead to Rome? 

The complexities of re-opening thus lie far beyond anticipating when restrictions on businesses and borders will be lifted, getting your staff ready and opening the doors. Above all, there are strategic decisions to be made and opportunities to seize, and a savvy hotelier should be able to navigate the short, medium, and long-term considerations to take the high road to recovery.  

Given the sheer number of hotels looking to re-open, strategic decisions should be made in regard to whether the re-opening of hotels could be staggered to consolidate this cautious demand, especially for owners with multiple assets. Guy Phillips External Link, Sector Head of Hotels, Origination & Client Coverage at Santander explains, “a greater level of delay to opening could be more beneficial if you’re only going to be opening at a point where there are a lot of other challenges and the level of cash burn is actually going to increase.” He emphasized that conversations need to start early, and that banks should be partners in supporting in these decisions. To take it a step further, this could also be a time for a reassessment of long-term strategic goals, which may question whether some hotels should even re-open at all. In fact, 71% of the audience believe that 5-15% of hotels may find themselves permanently closed due to this pandemic. A sad story for some, but good news for others as it means less competition during the difficult recovery stage.   

Source: Cushman & Wakefield Research (based on 70 responses of the webinar attendees. None of the respondents selected ”0%”) 

For every optimist who sees the glass half-full, there is also a major opportunity amidst the crisis. As Desmond Taljaard pointed out, hoteliers need to question their traditional thinking on how to operate hotels. Necessity is the mother of invention and hotels can come out from this crisis more efficient and resilient. It is clear that hotels will initially have to operate with heavily reduced services and amenities, more like “bedroom factories”. But the question is, or should be, do we need to roll back all the perks, and would the guest mind if they are gone forever? In addition, this could well be the time to invest in technology that could streamline processes and drive further operational efficiencies, before delving into the rehiring and retraining process. This crisis has challenged hoteliers to rethink the confines of hotel rooms, which quickly became quarantine apartments; offices; rooms for key workers, and in turn demonstrating the flexibility and adaptability of hotels. And now with this opportunity to hit the reset button by better distinguishing the needs from wants, there is a high chance for hotels to create a better way forward for the industry.  

What’s Next: Travel package to your doorstep? 

With empty streets in even the most popular tourist destinations, it would be easy to cast a dark shadow over the hospitality sector and its future. But as Stefan Leser said, “What we loved before the crisis, we will still love after the crisis”. Humans are explorers and wanderers; it is part of our genes, which ultimately underpins the travel industry. Despite the different backgrounds of the panelists, they agreed that the resilience of the hotel sector lends great confidence into the future of this industry. This sentiment was echoed by the audience, of whom nearly 80% do not believe that COVID-19 will have any long-term impact on the industry.  

Source: Cushman & Wakefield Research (based on 74 responses of the webinar attendees. None of the respondents selected ”No impact”) 

It may be possible to receive flowers, books and a new TV to your doorstep, or complete a client project from the comfort of your home – but who could deliver a package of travel experiences? The undeniable reality is that if you want to see Paris from the top of the Eiffel Tower, walk on the Great Wall of China, or build those lasting relationships with your key international clients, you will have to travel. Although we are likely to see a temporary shift in travel patterns, with humans’ innate curiosity to see and discover, along with our desire to connect, it will only be a matter of time before the industry gets back on its feet.   Tune in to the webinar recording HERE External Link


23 April

How big is the impact and when will the hotel performance recover? Unsurprisingly, these have been the two most frequently asked questions by hotel investors, owners, operators and lenders in recent weeks. 

The answer to the first question is regrettably relatively easy now, as most hotels across Europe are closed or operate with single-digit occupancy levels since March (as discussed in our update from 2nd April). Several hotels are also finding a way to sustain some income from alternative demand sources, including offering rooms as accommodation for hospitals, staff in essential roles & also at times for patients. Nevertheless, alternative-use opportunities are limited. Hence most hotels have hit rock bottom, looking for signs of recovery. 

While some forecasts are providing an outlook for tourism on a global or European level (as outlined in our previous update), the reality is that this is based on several major assumptions and it is likely to vary notably by market. For example, our analysis of how the gateway cities in Europe performed during the global financial crisis in 2008/2009, suggests that the pace of recovery to prior peaks could range from 10 months to over 9 years, with 5.6 years being the average.  


The key factors that typically affect the length of recovery include: 

Nature of demand

Given the travel restrictions and health concerns, long-haul travel and group business are likely to take more time to recover. Paris, Rome and Barcelona are examples of cities that have benefited from the strong demand originating outside Europe and regularly hosted major events and conferences. While the lack of this demand in the near future might be a challenge for these destinations, their exceptional appeal should help to attract also travellers from closer to home and thus improve the pace of recovery. Nevertheless, markets with historically strong domestic demand are likely to see returning guests earlier. Most regional cities fit this bill but examples among larger destinations in Europe include Moscow, Hamburg, Glasgow, Krakow, Lyon, Cologne, Oslo or Warsaw.  

New supply

It is fairly obvious that markets that are experiencing an influx of supply will struggle more to recover. Examples of cities facing this challenge include Dublin, Manchester, Copenhagen or Warsaw. However, many projects will likely be delayed and some even cancelled, thus the impact will be lessened. Cities with very limited pipeline, such as Bratislava, St. Petersburg, Brussels, Prague and Riga, to name just a few, will be better placed.  

Level of latent demand before the crisis

Markets with high occupancy levels throughout the year and frequent compression nights are typically resistant to downturns and supply additions. A good example is London, that was one of the fastest markets to recover after GFC with hotels consistently trading at high occupancy, despite ongoing notable additions of new supply. Other examples of markets that were recording strong occupancy levels in recent years until the COVID-19 crisis include Dublin, Edinburgh, Amsterdam, Prague and Berlin.

Governments restrictions and tourism support

This is probably the most important and unpredictable factor that will affect the start and pace of recovery in each market. The controlling institutions and governments are currently either uncommitted on when travel can resume (i.e. the UK Foreign Office recently extended the ban on overseas travel indefinitely External Link) or have amended previously announced dates. For example, the European Union Commission initially announced a travel ban on non-essential movement for citizens from non-EU countries to be until mid-April, but this was extended on 8 April to last until 15 May. French President Emmanuel Macron last week suggested that the EU stayed closed until September at least, and the EU Commission President Ursula von der Leyen has warned travellers to hold off on their holiday plans as Europe continues to be profoundly affected by Coronavirus pandemic (COVID-19). Furthermore, some countries are extending border controls and restrictions even beyond September, such as Denmark and France extending it until mid-November and end of October respectively. While this does not necessarily mean that extensive travel ban will last until then, it indicates how long some restrictions are likely to last. Good news is that some countries are exploring various options of relaxed travel restrictions between specific destinations, such as the Czech Republic discussing the establishment of tourist corridors with Croatia. This gives some hopes to travellers and hoteliers for their summer season.

16 April

Tourism Outlook

The hospitality sector is an integral part of the overall travel and tourism industry; thus, it is essential to understand how it is being affected by COVID-19 and what is the outlook. The worst might not be over yet, but enough has been done to start counting and look over the horizon. Albeit any forecast may quickly be surpassed by the fast-changing reality.  

Big Picture 

The travel sector is at a standstill and a forecast by United Nations World Tourism Organisation (UNWTO) External Link estimates that in 2020 the international tourist arrivals could decline between 20-30% globally, down from an estimated growth of 3% to 4%, as forecast in early January 2020. This could translate into a loss of US$300 to 450 billion in spending by international visitors and consequently set the industry back by 5-7 years, to the levels of 2012-2014. 

OECD expects even more severe impact in their recent COVID-19 Tourism Policy Responses note External Link, estimating a 45% drop in international arrivals across the OECD area, if tourism starts to recover in July 2020 and strengthens progressively in the second half of the year. However, the drop in arrivals could rise to 75%, if recovery starts only in September.  


Focus on Europe 

Oxford Economics in its Coronavirus Impacts and the Path to Recovery External Link update also assumes some rebound starting in summer and forecasts nearly 40% overall decline of inbound travel across Europe in 2020. Western and Southern Europe is projected to be the most affected, while Central & Eastern Europe is forecast to see about a 35% drop.  

In terms of Europe’s major cities, London is expected to lose some 5.7 million arrivals, followed by Rome (4.6 million) Paris (3.5 million) and Barcelona (3.5 million). The overall impact is now anticipated to be felt for about 8 months, until October. Although the current travel restrictions are assumed to last about 4 months until mid-June and then be somewhat relaxed with the hope that some tourism rebound could already be seen during the summer holidays. Domestic travel is expected to lead the way, followed by cross-border tourism within Europe. 

The hopes for a relatively fast recovery are fuelled by the good news from China with tourism recovering and hotel occupancies rising (as discussed in our previous update below). However, Europe is much more dependent on cross-border travel so might take longer to recover. Also, the latest surge of new cases in Singapore and consequent partial lock-down depicts a downside scenario of possible longer restrictions in Europe, pushing the potential recovery of the tourism sector beyond this summer.   The good news is that holidaymakers are still keen to travel with bookings rising for Q4 2020 and 2021. A recent COVID-19: Insights on Travel Impact External Link update by Sojern indicates that searches for intra-European travel grew for trips from as early as October and actual travel bookings for trips starting from December 2020 forward are growing in all key markets. Especially when it comes to travel to UK, Spain, France and Italy, the bookings show increases ranging from nearly 150% to 1500% y-o-y by February 2021. These statistics provide some indication of notable latent demand, promising strong rebound of tourism once the restrictions are lifted. 



9 April

With most hotels across Europe being put into hibernation, hoteliers are now shifting from reactive firefighting to being more proactive and looking towards the horizon. 

The unprecedented decline in tourism is causing a detrimental impact on the hotel sector. According to the latest update by STR from 2 April External Link, hotels in Europe are forecast to record a 37% decline of revenue per available room (RevPAR) in 2020, driven primarily by a drop of 27% in occupancy. A strong rebound is expected in 2021 with RevPAR expected to grow by 41%, but full recovery to 2019 numbers is anticipated only in 2022. Markets with strong domestic visitation are expected to recover first, as local travel is anticipated to be less affected by government restrictions and border closures.  

In terms of impact on the bottom line, it is still difficult to estimate, especially as the most relevant numbers for March are not available yet. 

However, the recently published report by HotStats External Link with Profit & Loss results of hotels in China gives some hints about what can be expected in Europe. During the peak downturn in February, hotels in China recorded nearly 90% RevPAR decline that translated to over a 216% drop of GOP per available room resulting in USD 27 loss per room per day.  

In Shanghai and Beijing, the profit deficit was much higher, at around USD 40 per room and day. This would translate to a financial loss of over USD 180,000 per month for a 150-room hotel, before fixed charges such as rent, insurance and property taxes. Considering the higher cost structure of hotels in Europe, especially in terms of payroll, the initial operational losses are likely to be higher. 

While the profitability numbers from China show how hard the owners and operators can be impacted, the country also gives some hope for European hotels.  

Travel data provider ADARA is seeing a rebound in bookings for flights to and within China, that are now at about 30% of the volume that was booked in early January. Also, the latest data from STR shows the increasing recovery of the hotel market in China, with some 89% of hotels being open again. An important trend is that while it took 4 weeks for average hotel occupancy level to increase from 10% to 20%, it took just 2 weeks to rise to 30%. Some sub-markets, such as midscale and economy hotels in Chengdu, are already running at about 50% occupancy. Europe is about a month behind China thus based on the China experience, STR predicts that things may start to turn around in May or June. 

While the hotel sector has probably reached the bottom in performance terms, the good news is that the sector is about to start a new growth cycle, and this will provide a wealth of opportunities for those who are agile and prepared. 

2 April

The COVID-19 crisis is drastically altering the course of the European hotel market in 2020. 

While some markets across Europe had already seen a softening of hotel performances at the beginning of the year, primarily driven by new supply, most markets still enjoyed healthy growth rates until the third week of February.  

On average, during the first two months of the year, YTD figures for Europe showed RevPAR growth of 1.1% YOY, due to 1.4% increase of ADR, offset by a minor decline in occupancy of 0.3%. This picture changed dramatically during the last week of February when the COVID-19 crisis erupted across Europe with businesses and governments starting to initiate travel and business operation restrictions.  

Not every market was affected at the same rate initially, with occupancy declines in mid-March ranging between over 90% in Italy to the less dramatic drop of around 20% in the UK.  

The decline, however, escalated in the second half of March, with most hotels across Europe either closing or experiencing single-digit occupancy levels. Exceptions are some airport locations where hotels still cater to crew business and stranded passengers. Also, regional hotels initially benefited from some domestic business (staycations), although this is drying up fast. 

Ultimately, all hotel markets are nearing full operational shutdown, with hoteliers focusing on minimising its negative impact, implementing various mitigating measures, including staff furloughing but also layoffs, depending on local regulation and government support.  

Some hotels in Europe are being converted into hospitals, quarantine facilities, shelters, temporary logistic spaces or even serve as temporary work locations with rooms being offered as private offices to those who struggle to work from home. Also, hotel restaurants are being used to produce food for delivery and staff are being re-deployed with delivery companies or in other sectors. 

Various stakeholders, including owners, operators and banks are engaging in finding compromise solutions including fee reductions or deferrals, reduced rent payments or rent holidays, as well as loan payment suspensions and new credit lines.  

So far, the focus is on temporary solutions rather than drastic irreversible measures with the hope for a recovery starting in the second half of the year. There is no doubt that government support across Europe will be critical for hotels to overcome this crisis.

In terms of transaction activity, buyers and sellers are primarily deploying a wait-and-see strategy. Some advanced deals are progressing, especially forward sales or forward commitments for development projects, where investors and banks can see beyond the current situation.  

While the majority of transactions are being put on hold, there is no evidence yet of distressed sales, given it is very early in the downturn, temporary government support and hopes for potential containment of the outbreak within this year.

The core focus is on minimising the impact on owned assets but some investors are actively analysing the markets and preparing to capitalise on any opportunities that might come given the unprecedented shocks that are shaking the hotel sector.  




blue duotone graphic of people in office
Insights • Economy

EMEA Markets View

Our EMEA local market research colleagues share the latest real estate market views from their countries.
Andrew Phipps • 13/01/2022
red steel building
Insights • Commentary

UK Real Estate Perspectives

We are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 04/11/2020
New Perspectives (image)
Research • Topical Report

New Perspective: From Pandemic to Performance

As a global leader in the commercial real estate (CRE) industry, Cushman & Wakefield offers clients a new perspective on COVID-19’s impact on CRE and beyond, preparing them for what’s next.
Michael Boonshoft

More Hospitality Insights

Luxury hotel room with double bed and flowers
Research • Hospitality

Hotels & Business June 2022

Cushman & Wakefield’s Research department and teams specialising in transaction analysis are certainly undegoing a period of intense activity. There is a need for continuous analysis given the highly volatile circumstances.
Bruno Hallé • 01/06/2022
Women Hotel City
Insights • Hospitality

The Hotel Investment Scene in CEE

Welcome to our third edition of the joint Cushman & Wakefield–CMS report on the Hotel Investment scene in CEE: Overcoming the Pandemic & Bridging the Financial Gap.
Bořivoj Vokřínek • 01/07/2021
woman with summer hat walking away from camera
Research • Hospitality

Hotel Investment in the Iberian Peninsula

The tourism sector is one of the fastest-growing industries in the world, increasingly capturing interest from investors attracted by the premium returns and positive long-term prospects. Cushman & Wakefield and CMS review the hotel investment market across the Iberian Peninsula to understand how it will expand and evolve.
Gonçalo Garcia • 10/10/2019


Get in touch with one of our professionals.
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Cookies.
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All