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Hotels rates across Europe will rise sharply over the next two years as occupancy levels hit record highs, according to a study from accountancy firm PwC.
According to its latest European hotel forecast, the improving economic and travel environment has helped "rejuvenate" trading in 17 out of the 18 cities analysed by the study.
PwC predicts the top revenue per available room (RevPAR) growth cities for 2014 to be Dublin (5.2%), London (3.8%) and Paris (3.8%).
PwC said it expects "records to be broken" for rooms rates in London, as RevPAR, rises by 3.8 per cent to "an all-time high" of £117.10.
This will be driven almost entirely by average daily room rate (ADR) growth of 3.4 per cent as rates climb to £141.60 in 2014, said PwC. This is compared to £139.07 in 2013 and £123.00 in 2010.
London will also see high occupancies averaging about 85% - the highest since the mid-1990s.
RevPAR is calculated by multiplying a hotel's ADR by its occupancy percentage.
PwC's head of hospitality and leisure research, Liz Hall, said occupancy is expected to stay high and rates to see more growth.
"There will be stimulus to business and leisure prospects as GDP recovery strengthens," said Hall.
"It’s a mix of ADR and occupancy, although in many cities ADR is the stronger metric. This is true in cities like London where despite a high supply pipeline, occupancy is already very high and the city is virtually full up mid-week. By contrast, it’s largely occupancy driving growth in Lisbon and Milan."
The study, which is published today, found the most expensive city for hotel room rates is Geneva (€230.50), followed by Zurich (€196.40), London (€163.80) and Paris (€155.20). PwC said it expects these rates to continue to rise into 2015.
PwC said despite these positive results for the industry, hotels need to continue to adapt and understand changing trends, such as mobile and digital revolution.
“The global economic landscape is changing quickly and hotels have to constantly adapt to these changes to remain successful in the market," said PwC, head of hotels, Robert Milburn.
"The challenge for hotels is to capitalise on the improved environment as well as the new opportunities a changing world offers," he added.
Last week a separate study from TMC HRG found increases in hotel room rates around the world are being led by major economic cities rather then national trends.
The study found average room rates (ARR) have tended to be affected on a national basis but now individual destinations, such as Singapore, Barcelona and Beijing, are driving up room rates and “bucking” certain country’s economic trends.
The study found Europe and America have taken the lead on ARR recovery in 2013 as markets and industries have picked up and business travel has been placed “firmly back on the agenda”.