Luxury

Luxury goes to the beach

Luxury hotels were able to increase average daily rate in regional locations, as demand for coast and country grew, according to STR.

The data was revealed as a study from Small Luxury Hotels of the World reported on pent-up demand from affluent travellers.

Coastal occupancy was on average 35 percentage points higher than main city occupancy across six European countries for the week ending 25 July 2020. Even Italy, once the epicentre of Covid-19 in Europe, reported 53% occupancy in the Basilicata/Calabria/Puglia market.

Aoife Roche, STR director of account management, said: “Segmentation remains a key consideration: Leisure travellers are a primary demand driver at this point in the pandemic, and beaches are traditionally popular holiday destinations.

“Beyond segmentation mix, new Covid-related hygiene guidelines are also influential. Physical distancing requirements may shift demand from crowded urban areas into sprawling, bucolic destinations. Markets centered around lower-risk outdoor activities – aka beaches – may have better luck attracting travellers looking to vacation safely.”

Roche said that moving away from coasts and into the countryside yielded another pandemic performance pattern, this one related to hotel class. Luxury and upper upscale class hotels had, she said, “struggled mightily” over the past several months, largely due to their reliance on group and business demand. As these sources dried up, performance suffered and many hotels temporarily closed.

However, travellers moving out of cities and into secondary and tertiary markets have breathed new life into higher-end hotels. Luxury and upper upscale class properties in provincial markets across nine countries filled more than 50% of rooms for the week ending 25 July. Such high demand was, she said, impressive on its own, but next to comparable hotel performance in city centres, a clear preference for regional destinations appeared. Main city occupancy in five of nine countries fell short of 20% during the fourth week in July.

Across provincial markets, luxury and upper upscale occupancy exceeded average market occupancy in six of nine countries, suggesting a preference for upper-tier hotels over mid-tier or budget properties.

Roche said that healthy demand for luxury and upper upscale hotels allowed for pricing power, and provincial markets in five of nine countries increased average daily rate year over year, “a welcome shock in the middle of the worst hotel downturn in history".

 

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