Here are five trends that we think are important:
Medium-term growth
A big trend in the region moving into 2025 and beyond is economic recovery and policy-driven competitiveness. While growth in Europe is expected to remain weak in 2025 - hovering around 1 per cent – there are expectations of a stronger macroeconomic performance by 2026.
“There’s a growth challenge in the EMEA region – economic growth performance is pretty weak partly due to political uncertainties for example in Germany and France but there are hopeful signs and we should see a macroeconomic recovery going forward,” Alexander Boersch chief economist and director of research at Deloitte Germany says.
This hopefulness comes on the heels of the EU Commission paying renewed attention to improving competitiveness in the EU, recently publishing a work programme to aid in that regard. The resultant resurgence in trade and investment confidence could drive greater economic momentum, therefore benefitting the sector through increased travel and spending.
“If we’re able to generate more growth in Europe, that would certainly help lift the boats, also for the hospitality industry, Boersch says.
This is as the travel and tourism is expected to boom over the next few years.
“Travel and tourism will go from being worth about $11 trillion globally to $16 trillion in the next ten years,” says Julia Simpson, CEO of the World Travel and Tourism Council. “There’s a lot of potential and the opportunities are immense. I’m meeting a lot of investors, a lot of private equity that are looking to put money into travel and tourism as they see it as safe and offering great returns,” she says.
Trade conflicts
This is as geopolitical shifts and trade conflicts continue to reshape global trade flows, influencing travel patterns and hotel demand, with new trade hubs emerging which could create new opportunities for hoteliers and investors.
“Europe is much more open and much more export oriented in comparison to the US or to China and we see a lot of change in trade flows already in recent months. There are some huge new free trade areas. Mexico is emerging, we see rising trade intensity with Japan, there’s a lot of export growth in South Korea. And we have growth markets like India, Indonesia and Vietnam,” Boersch notes.
As new trade relationships are forged, so will opportunities grow for hospitality players targeting these markets.
Opportunity in Africa
And a region heaving with potential is Africa, with the continent increasingly becoming a focal point for hotel investors, thanks to its expanding economies. Markets such as Nigeria, Kenya, Rwanda and Morocco are experiencing rising investor interest but challenges remain including political stability and infrastructure gaps.
“Rwanda is very successful on travel and tourism and South Africa that has always been a star in that regard. There’s incredible opportunity across Africa and investors want to invest but they do need to ensure that things feel stable, there’s infrastructure and connectivity,” Simpson says.
Positively though, trade agreements, such as Kenya’s recent deal with the European Union, are expected to facilitate increased business travel and investment in hotel infrastructure.
Boersch agrees there’s opportunity across the continent, noting demographic tailwinds and a growing population. “There’s a lot of growth potential in Africa but that depends on if individual countries are able to turn things like the demographic dividend into employment and labour market successes.”
He adds: “Kenya is a very interesting market and we see a sort of lot of a lot of potential there in terms of trade. Rwanda turned into a success story from a macroeconomic point of view - it's a highly digitalized country with good growth rates so that that certainly also a market to watch. Nigeria, Africa’s biggest country is always interesting.”
Demographic shifts
On the demographic point, Europe’s aging population presents both challenges and opportunities. Older travellers tend to have higher disposable incomes but at the same time, labour shortages remain an area of concern.
“We are in the middle of a demographic change in Europe - we have been talking about aging for ages but now it's really biting,” Boersch notes.
But this, amongst others, is an area where technological advancements and AI can bring value. As the workforce in Europe shrinks due to demographic shifts, AI will be instrumental in filling labour gaps.
“This is where technology meets demography. AI is actually our best hope to cope with these labour shortages which will only become worse in the years to come,” Boersch says.
Improving trade relations with countries with growing populations and the resultant migration could also help addressing labour challenges.
AI roll out
These innovations also have the potential to revolutionize the sector by boosting profitability, with AI-driven revenue management tools, such as those already being implemented by leading hotel brands, helping to improve operational efficiency and optimize pricing strategies.
“AI is going to be really valuable for simplifying repetitive processes behind the scenes. It also allows a hotel to focus more and invest more on that face-to-face element. AI could also help in terms of waste management/reduction and improving the customer experience,” Simpson says.
Boersch adds: “We're now in a phase where many companies are experimenting with AI and new technologies and are on the way to find out what's the best way to apply it. Companies that are at the forefront of these trends are likely to see growth and it can be quite a massive competitive advantage.”
Despite near-term economic challenges, the EMEA region is ripe with opportunities. Those who embrace technological advancements, capitalise on trade shifts and make the most of demographic changes will be well-positioned for success moving forward.
By Ifeoluwa Taiwo
