The European hotel industry is showing steady signs of growth, although it is yet to recover to pre-downturn levels, according to data released today by American Express Business Insights, the data analytics and consulting arm of American Express.

Overall hotel spending in Europe grew seven per cent in 2010, with a further four per cent growth in the first quarter of this year.

Growth has been driven by tourists from outside of Europe returning to the region, increased spending in luxury hotels and a rebound in business travel. Generation Y travellers, those in their 20s, have proven to be particularly resilient. They largely defied the downturn and are showing a clear appetite for luxury spending.

The insights, presented at a gathering of senior executives in the hospitality industry in London, provide an in-depth look into the state of the hotel sector across the major European markets. Spending was analysed for the UK, Italy, Germany, France and Spain, from before the downturn in 2007 to the end of the first quarter in 2011.

The UK hotel sector led spending growth in Europe in 2010, growing at a healthy 10 per cent, followed by France (seven per cent) and Germany (four per cent). None of the markets has returned to pre-downturn levels. However, the UK, France and Germany are almost back to 2008 spending levels. While Spain (eight per cent) and Italy (four per cent) also grew in 2010, they were hit harder by the downturn and have further to go before they recover to 2008 levels.