Europe was seeing signs of recovery, led by regional leisure destinations, according to the latest data from STR.
The company said that gateway cities were lagging but that there was “a proper heartbeat from a leisure perspective”.
Robin Rossmann, managing director, STR, said: “We are clearly in the phase of reopening Europe and there is now aligned travel between countries, so things are getting better. Hotels are reopening because they’re allowed to and there is some demand but that doesn’t mean that we are going to see levels bounce back to last year.
Looking to China as an example, Rossmann noted that Beijing was having a rebound in cases of the virus, “which is something we’re going to have to deal with until there is a long-term cure”. The country was now at 52% occupancy, rolling seven days to 13 June, “but we think that the plateau will be at just below 50% - there may be another lift”. The country’s occupancy was at around 20% lower than the same period last year, but first tier cities were lagging the recovery of other cities “which is a common trend we are seeing around the world”.
Taking that theme, Rossmann said that the the top performing areas around Europe were not the big cities, but regions like the Baltic coast - with 52% - were outstripping the major gateway cities. In Southern Europe it was the tourist destinations which were seeing occupancy “a proper heartbeat from a leisure perspective”.
He added: “We have recovery in Europe, week ending June 14th, 21% in open hotels (not including hotels which are closed) occupancy for the whole market was 9%. When they reopen they will drag down occupancy unless demand grows.”
In Germany reporting and economic occupancy were similar, at 24% and 20% respectively, indicating how much farther along the recovery was for the country.
Business on the books for the gateway cites showed that most European capitals were not showing anything about 20% for the next 90 days from 15 June
Rossmann cautioned on the potential for the race to the bottom for rates. He said: “One of the main ways hotels recapture demand is through pricing, because consumers are easily able to compare different hotels in different price points. Rate will be under pressure in this period of low demand. In China ADR is 20% behind last year - not because of discounting, but change of mix between guests and change in demand between economy and luxury.
“We think that recovery in Europe won’t take as long as China, but that it will plateau and that will depend on where guests come from.”
Looking ahead, Rossmann said: “We already know that this downturn has been much more severe than the global financial crisis, and we know that rate performance has been lower because of a change of mix and a loss of compression nights. It may take six to 12 months until there are no longer restrictions on travel and the virus is under control. That’s the area where we need to be worried, where rates may be lower for longer. We think demand will recover in most markets by 2023, but there will be supply growth which will affect rates, taking four years, one year behind the global financial crisis.
“When we look at revpar, it took seven years to recovery after the global financial crisis, but it’s certainly going to be more painful in the short to medium term.”
Insight: Rossmann used barbecuing as an analogy for the recovery in hotel performance and there’s nothing wrong with taking a good idea and building on it so here goes. What has become clear is that early forecasts around leisure travel were playing out and, if nothing else, as we head into the summer, hotels were not about to be banking on their conference business at this point in any case. Meanwhile, the autumn - and possible second wave - looms, with the earliest likely business travel. Certainly most companies were looking at the autumn for bringing people back into the office in a more convincing fashion.
So have your summer, people, and make remote and regional hay while chucking another sausage on. But not all hotels will be smoking - the city-centre sites which the brands have so enjoyed will be looking to repurpose with a leisure focus.
The tasty flesh of business travel, which those hotels which have carved out basement conference centres rely on - remains an unknown. A bun without any burger? A hot dog without any mustard? Hotels cannot live on bread alone. As this pandemic progresses, the hunger pangs will be increasingly felt.