Opinion And Analysis

This is how the urban hotel industry in Europe is disappearing

By Silvia Castro Betancourt 1 Comments NEWS, Opinion And Analysis

Forty years ago, Europe was virtually hotel chain-free. Accommodations were nearly exclusively family-run businesses, some good, others not so well managed.

Forget homogenization, common characteristics, recurring features. Each hotel was a surprise. All in downtown buildings, old, with few rooms, with a deeply heterogeneous offer. Spain was one example, France was the best example of this way of offering accommodation: old, classic, independent hotels. The whole country was the same.

Then some hotel chains began popping up, of which Accor -Sofitel, Ibis, Mercure, Novotel- are the best known. Accor began building in the peripheries and by doing so, it started changing the landscape. Seen one of their hotels, you've seen them all, because they are all like drops of water. But they all have a much higher average of rooms, and the biggest advantage over the smaller downtown hotels, is the parking. And, of course, more high-end brands incorporate a more professional demeanor as well, whereas the smaller hotels may lack this touch, due to less personell.

Flash forward to the present, AirBnB laces up what remains of the traditional and urban hotel sector. And France is still the example. According to the official data from 2016, France saw 450 hotels close. If we discount the openings, the country lost more than 200 hotels, which is a lot for a country which is one of tourists' favorite.

Why do so many hotels in France close - and when we say France, we also mean Europe - in the same hotel segment?

First, because the business is simply not going well. Or, rather, this business, well conceived and all, does not work anymore. That's what 36 percent of those who closed have concluded. 28 percent claim retirement, which is true but also denounces that the heirs of the property have not seen anything attractive in this business to stay in the market. The rest have opted to become homes, and in some cases for renovation and subsequent reopening.

This is the fate of the family hotels which were in abundance throughout Europe and whom Booking is squeezing the last drops of its capacity. Because, to their problems we must add the commercialization that today can practically only be done by the big OTAs.

450 hotels closed but only 132 opened in France. And most of these belong to chains. They are standard hotels, offering the same as the others. And, in general, they are bigger. Not all of them are on the periphery, but they are always organized based on car accessibility.

Like France, Europe. Like Europe, Spain. Urban family hotels, small and unmarked, are still in decline. The chains, with a predictable product, with economies of scale, with the capacity to standardize, gave their first blow to the small urban hotelier. Only the best survive, the big ones, those who have managed to catch up.

But that's nothing next to the attack that is now Airbnb: for that audience that does not want standard products, which wants the city center, now Airbnb has a better, more competitive, more level response. In some large cities where there has been pressure on the price of rents, the authorities have applied restrictions to Airbnb and similar companies, but that does not prevent the open competition of this type of apartment offer, critical for that model of hospitality.

There are other factors that aggravate the pressure on the traditional hotel entrepreneur: investments in urban centers to modernize hotels are getting stronger, the problems to market are also more intense and, finally, the traveler is less and less faithful to a product, so we find that the risk is very grave.

The above article was written and published in Spanish and has been translated into English. Click here to read the original article.


  • Julian
    January 10, 2018

    That was really interesting to read. I did not know that yet.

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