Sweden Takes Nordic Lead

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Sweden

The Nordic countries’ hotel industries outperformed Europe as a whole during the first nine months of 2010, according to a press release from STR Global, the leading provider of market information to the global hotel industry.

The recovery of the Nordic hotel market after the worldwide economic downturn was evident in the year-to-date September performance results, with the region’s average daily rate (ADR) growing by 8.5 percent in Euro-terms and revenue per available room (RevPAR) by 10.7 percent. The European average showed higher occupancy growth (5.6 percent) resulting in a 9.5 percent RevPAR growth, as seen in the chart below.

However, when looking at the individual Nordic countries in their local currency, a different picture emerges. Sweden registered the highest rate of RevPAR growth through September, reporting an 8.0 percent RevPAR increase compared to Denmark (-5.9 percent), Finland (2.3 percent) and Norway (-2.5 percent).

Of the six Swedish markets tracked by STR Global, Malmo and Gothenburg showed RevPAR growth driven by improving average rates despite lagging occupancy due to new supply. Occupancy was the driver in Jonkoping, whilst both rate and occupancy growth played a part in the RevPAR growth of Stockholm, Helsingborg and Karlstad. Swedish RevPAR growth was supported by the country’s strong economic recovery and the related increase in consumer confidence.

In neighbouring Norway, three of the six markets tracked show RevPAR improvements so far this year. Oslo and Kristiansand are the only two Norwegian cities that reported declines in both occupancy and average room rates, declines that pushed down RevPAR by -3.5 percent and -7.7 percent, respectively. Oslo was also affected by a 9.6-percent room supply increase leading to a fall in RevPAR. Kristiansand is the only Norwegian market with a decline in demand compared to YTD 2009. In contrast, the market of Stavanger/Sandnes outperformed the rest of the country with growth in all three indicators, as seen in the table below. The recovering local economy led by the oil industry has helped improve the hotel performance of Norway’s “petroleum capital”.

Copenhagen suffered the highest declines in average rate and RevPAR of the Nordic markets reviewed, falling by 11.1 percent and 8.2 percent, respectively. It is the only capital that reported a decrease in RevPAR year to date. Copenhagen did have the strongest growth in demand year-to-date (12.4 percent), but this was insufficient to outweigh the 8.8-percent increase in supply year-to-date.

Helsinki’s demand for hotel rooms grew 9.8 percent year-to-date through September. Coupled with a slight decrease in supply (-1.2 percent), the city recorded the highest occupancy increase (11.1 percent) of the four Nordic capitals. However the growth in demand did not convert into average rate gains and RevPAR consequently only improved 3.6 percent year-to-date.