The latest hospitality data sets may suggest turbulent times for the global industry, but the long-term picture is still reassuring, according to data experts speaking at the IHIF EMEA on Tuesday.
Aoife Roche, regional vice president - EMEA, STR, admitted that in the wake of war breaking out in Iran on 28 February, STR’s late-February forecasts had become “null and void”. However, she demonstrated that the industry could still read plenty of positive narratives from emerging statistics. These included luxury performance in Europe underpinning RevPAR delivery thanks to impressive average daily rates (ADRs). She noted that some 50 percent of the 550 European submarkets monitored by STR had registered RevPAR growth for the last year, with the strongest in double figures.
In Milan, in February, ADRs peaked at a record €420 as a successful Winter Olympics produced outstanding revenues. Southern Europe countries are continuing to see the highest RevPAR growth of the bloc, she said.
Declining Middle Eastern occupancies
Roche went on to sketch a complex picture of declining occupancies in Middle Eastern markets. While this year’s Ramadan dates contributed to this, war in Iran has been a huge market mover. For example, occupancy rates actually spiked around 28 February as travellers were stranded, with most taking around five days to leave. Subsequently, she noted, occupancy declines kicked in quickly, proving faster and sharper than relative falls during the pandemic period. “Once airlift resumes and security concerns abate, travel does resume,” she added. “The Middle East is a small but mighty region.”
Stepping onto the stage next, David Goodger, managing director EMEA, Tourism Economics, added some colour about the bigger geopolitical picture. “Last year we saw trade wars being launched and then President Trump being forced to step away,” he said. “This year, a war has been launched and Trump is struggling to step back.”
The consequence for the Middle East, he added, would be a “US$56 billion loss in travel revenue for the region”. “At the start, we were hopeful it would be a two-to-three-week conflict. Now, two-to-three-months is the new baseline.”
Oil price economics
He noted that a lot of travel between Europe and Asia passes through Gulf hubs, putting on average 4 percent of European travel at risk. For the UK, this rose to 12 percent, he added. “We see oil prices staying at the US$110 – 120 per barrel price through the year, although it will eventually come down,” he added. “This will make air fares more expensive.”
Tourism Economics data does see oil prices affecting wider inflation figures in the Eurozone, with inflation forecasts now up to 3 percent from a previous prediction of 2 percent. “There will be a reduction in spending power, and a blow to income due to the reduction in direct travel from the Middle East,” he confirmed.
He added: “Things look pretty gloomy on the face of it, but we still hope in resolution of the conflict this year. The longer-term view is that there are still lots of reasons for optimism.”
He pointed out that “leisure travel remains at really high levels as a share of total consumption”, with this post-pandemic trend likely to continue, despite “a bit of a pull back last year from North America”.
“People are still spending on travel, and not looking to cut their spending across the board.” He said they were looking for value and seeking savings where possible, but “where they are seeing value, they are continuing to spend.”
He concluded that in the short-term, Europe could benefit from keeping hold of its travellers, since “Europe typically runs a travel deficit with Asia”. “As we saw with the Arab Spring events, hub closures and falling travel to MENA can boost Europe.”
Costs as key baseline
The third speaker on the data stage was Michael Grove, CEO Hotstats, who warned market watchers to “never bet against the GCC countries not to come back”.
The UAE, he noted, had been a stand-out market for labour costs in the wake of Covid, seeing labour expenses go down, while they were rising in most western markets. Although its hospitality industry was now being challenged by other rising costs, such as utilities, its differentiation made it an interesting market for diversification strategies.
Wage expenses, conversely, were still haunting key European markets, he said, making “expense lines” such an important focus. “The real challenge to hoteliers is how we drive revenue – we need growth on the top line,” he said. But he noted that while overall average RevPAR growth for the region in 2025 was around 2 percent, certain segments such as golf resorts – rising 13 percent – or spa and wellness resorts, rising in the high-single digits – were interesting outliers, that might inspire greater investment selection.
Going forward, he said that a focus on costs was key. “Cost have been growing significantly faster than revenues. In 2026, we thought we would see energy costs fall, but with war, there’s now a risk they will rise.” He concluded by noting that markets which have seen profits expand tended to be those that had managed to engineer RevPAR growth in excess of 3 percent, increasingly a key metric.