Empty beds: Some development pipelines in the hotel space look to be oversubscribed. Is there a danger of severe oversupply in the European hotel market?
Europe’s pipeline of hotel investments is bursting with new projects. For some countries, such as Germany, planned constructions in the hospitality business have hit an all-time peak, while in others, the numbers are only slightly off record highs.
But concerns are mounting that supply levels are outpacing demand, taking the shine off the hotel sector. Slowing economic conditions and deteriorating politics are weighing on global confidence. At the same time, the sharing economy continues to throw up ongoing challenges for hospitality. This is leading to a softening of growth in Europe’s tourism market, which has experienced a strong 10-year run up until now.
So far, the hotel industry has taken the entry of new rooms in its stride. But weakness in some key markets has fostered fear of a clear oversupply, which in some regions looks to be severe.
David Kellet, senior director and head of hotel transactions at Invesco Real Estate, believes that new supply grow