European Cities Hotel Forecast 2016 and 2017 - Economic, travel and supply outlook

Eurozone GDP will continue to expand by around 1.6% in 2016 and 1.7% in 2017, its fastest growth rate since 2011. Many visitors to Europe come from further afield and the improving economic situation in the US should lead to increased numbers of tourists in the future. However, the global outlook remains mixed and the changing balance of global growth, low oil prices and geopolitical risks will determine the global economic outlook for 2016.

In the UK the situation remains positive. UK GDP grew by 2.2% in 2015 and we expect growth to remain broadly unchanged at around 2.2% in 2016 and 2.3% in 2017 with consumer spending and business investment being the main drivers of UK growth.

The economic outlook will also be highly dependent on how key geopolitical issues play out during the year. Three geopolitical issues will continue to dominate the news headlines. First, the migrant crisis in Europe, which has yet to be solved.

Second, the response of the international community to the crisis in the Middle East.

Third, the referendum on the fate of the UK’s membership of the European Union.

Both UK and global economic growth remain subject to these considerable uncertainties over the next couple of years.

Find out more - Could oil prices boost further air fare declines in 2016?

Supply outlook

Across Europe demand continues to outstrip new supply growth, and this is helping hotel performance. 2016 sees the pace of supply growth pick up a bit. Overall, London ranks as one of the European cities with the largest pipelines.