Most expect bankruptcies
A large majority of European hotel executives expect chains to go bankrupt this year.
A new survey of 261 executives found that 79% expected hotel chains to go out of business this year while 40% thought that more than five would go into administration in the next year.
The bulk of the executives (70%) also said there had been a "significant reduction" in business travel.
The figures are revealed in the DLA Piper 2009 Europe Hospitality Report.
The report, launched at the International Hotel Investment Forum in Berlin, found that European were less optimistic about the industry than their American counterparts.
While 59% of the Americans expected the industry to recover by 2010, only 39% of the European shared the same view.
Most European (52%) did not expect any recovery until 2011. The two main reasons for their pessimism were difficulty in raising capital for investment (43%) and the poor state of the European economy (33%).
Other main findings were:
- 84%of respondents describe their 12-month outlook for the European hotel industry as 'bearish'.
- 81% expected hotel assets to go down in the next 12 months.
- 26% believe the EU Parliament's potential removal of an EU country's right to opt-out from the Working Time Directive - which caps an employee's working week to 48 hours - will have a negative impact on the hospitality industry.
Karen Friebe, global co-chair of DLA Piper's Hospitality and Leisure practice, said: "Given the current economic climate it comes as no surprise that the majority of European hotel executives are decidedly bearish about the health of industry."
She said that while those likely to emerge as winners were making their company structure "leaner and fitter", the "losers are doing nothing."
Jonathan Worsley, an organisers of the International Hotel Investment Forum and an advisor to the World Travel & Tourism Council, added: "There can be no doubt economic conditions are putting significant pressure on all investment and development decisions.
"But opportunities remain for well-capitalised investors."
- The research was carried out in February among hotel executives including ceos, coos, and cfos.
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