STR: Nordic market improving

The Nordic countries of Denmark, Finland, Iceland, Norway and Sweden all showed increases in demand in year-to-September results, according to STR Global. Likewise, the year-on-year change in demand (rooms sold year-to-September) in each of the country’s capital cities also was positive. 

The 20.4% increase in demand recorded by Reykjavik for year-to-September is a reflection of the low base year of 2010, partly due to the disruption to the hotel industry caused by the Eyjafjallajökull volcano. For the same period in 2011, the city recorded the lowest actual average daily rate of €87.24 (US$123.53) amongst the selected cities. Additionally, Oslo and Copenhagen saw significant increases in demand of 9.6% and 10%, respectively. Stockholm, meanwhile, reported the lowest growth in demand at 2.2%, although it had the highest absolute demand overall.

Growth in demand needs to be viewed relative to changes in supply, however. In Stockholm, for example, supply growth of 3.6 % exceeded demand growth and the result was a slight fall in occupancy of 1.4 %. Nevertheless the city still recorded the highest ADR of €127.68 (US$180.79). Oslo and Copenhagen both reported supply increases at 5.8% and 4.8%, respectively, well above the average for the region of 2.1%. However, the knock-on effects of these increases in supply were not felt in changes in occupancy as demand growth significantly exceeded that of supply.

Demand and Supply, year-on-year % change for year to September 2011

Source: STR Global <br></br>
Source: STR Global

The STR Global Pipeline Report reflects the strength of the current performance of the Swedish hotel market with over 850 rooms under development in Stockholm and a further 1,400 in the rest of Sweden. Oslo reported over 900 rooms, and a further 2,300 rooms were under development in the rest of Norway. In Finland, hotel development was limited to 442 rooms in Helsinki. Also noteworthy is the fact that no major hotel companies reported any pipeline projects for Iceland.

“The strong economic performances in Finland and Sweden and overall increasing international visitor numbers to the region are reflected in the demand increases for hotel accommodation across the capitals”, said Elizabeth Randall, managing director of STR Global. “While our Forecast Reports show continued growth in demand for the remainder of 2011 of between 4.5% and 10.2%, a slowdown in demand growth is expected in 2012 to be between negative 1.2% to 2.7%.”