Airports in Frankfurt, Amsterdam and Paris are growing hotel markets separate from their respective city centres and are enjoying investor interest and confidence well over and above that experienced in the Heathrow hotel arena.
Hotel developments around Frankfurt, Amsterdam and Paris airports are enjoying a growth spurt while the decision on a third runway at London Heathrow has caused a stasis in the development of its local hotel economy – that’s according to a new report from Europe’s leading hotel property adviser Christie + Co and STR Global, the leading data benchmarking company for the hotel sector.
Andreas Scriven, Christie + Co’s International Managing Director and Head of Consultancy, suggests that while panic is some time away, the competitive threat to Heathrow’s dominance and the instability of its hotel pipeline is very real.
He says: “London Heathrow Airport is operating at or close to capacity. The political dithering over the provision of a third runway at the airport, or even the development of further UK airport capacity away from Heathrow, is having a very real effect on the longer term prospects for the local hotel market. While the threat to existing hotel supply is minimal, the majority of development remains on hold, is speculative or lacks the necessary planning permission.”
Meanwhile, airports in Frankfurt, Amsterdam and Paris are growing hotel markets separate from their respective city centres and are enjoying investor interest and confidence well over and above that experienced in the Heathrow hotel arena.
Christie + Co’s Scriven adds: “Airport hotel markets around Frankfurt and Amsterdam have significant potential for further growth in the future. Both airports have experienced strong passenger increases over the past five years as they have no material infrastructure constraints. With recent and ongoing investment and expansion at these airports, one can expect to hear a lot more from these two hubs in the years to come.”
Four out of five of the airports under review showed an increase in passenger numbers between 2007 and 2013, with Madrid the only exception. However, only the hotel market around Frankfurt International recorded an increase to revenue per available room (RevPAR).
While Paris Charles de Gaulle maintained its lead position in terms of overall hotel performance among all five markets under review, sadly Madrid, the fifth market analysed in the report is unlikely to be able to compete as a leading hub with its European rivals in the future, especially as internal competition in the shape of Barcelona El-Prat gains momentum.
Scriven says: “Madrid is a good example of an airport which has great hub potential but has not been able to deliver, creating an oversupplied hotel market which is now experiencing the consequences.”
Elizabeth Winkle, Managing Director of STR Global, adds: “Airport hotel markets have their own performance patterns, behaviours and uniqueness. While occupancy levels tend to be similar, airport markets achieve on average lower rates, which is related to a bigger share of mid-market hotels rather than luxury hotels. With the exception of Madrid and Frankfurt, growth patterns in revenue-per-available-room and passenger move in opposite directions, suggesting that an increase in the number of passengers does not always translate into positive hotel performance.”
European Airport Hubs – A Hotel Perspective
Photo caption: London Heathrow Airport.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
