Europe was likely to salvage some summer, led by regional hotels at the lower end of the market, according to STR.
The company said that the recovery so far in Europe was underpinned by leisure travel outside city centres, a picture which was likely to remain for the next two months at least.
Robin Rossmann, managing director, STR, said: “For a while now we’ve been talking about positive signs, now we can show some. From today we are seeing borders reopen for travel and tourism again. But will they come? They will and it’s probably a good thing. We never thought that overtourism would go from Barcelona to Bournemouth, but there are a number of markets which do not have the infrastructure to support staycationing.
“At the end of June there are still only a handful of hotels left with enforced closures of hotels. It’s good to see that things are now open and we can begin to light the fire of recovery. As those restrictions have been removed, we have seen hotels open.
“What is clear from what we have seen so far is that European travel and tourism and hotel performance has been decimated. The question is: can we salvage some of the summer? We are forecasting that it will recover, but that forecast is underpinned by the kind recovery we sae in China when markets started to open. The recovery will be lower than that, but when you look at how performance is trending, the recovery has started, focused on regional destinations, those hotels at the lower end of the spectrum, that can be reached by car and have car parking. Let us hope that the virus remains under control and that the economy continues to recover.”
Looking at China, Rossmann reported that, for rolling seven day occupancy to 27 June, the country had gone from “a strong recovery to the embers cooling down, we have seen that performance has plateaued". But, he said, even with China receding, by the end of June far less markets were at less than 25% occupancy and far more over it.
In Europe, for the week to 28th June, occupancy was ranging between 10% and 40%, for open hotels. Occupancy including all hotels ranges from 5% to 25%, with the latter including Germany and Switzerland where opening up had been ahead of the UK.
Rossmann commented: “The differences are between the city markets and the regional, where the main cities are lagging behind in terms of recovery and the growth in occupancy seen in countries is being underpinned by leisure destinations, particular in Germany and Italy.”
Pointing to pressure on ADR, he added: “Just because you see rates declining, does not mean that hotels are discounting. Those regional markets are seeing more resilience in rate, whereas the city markets are seeing pressure on rate, through change in mix rather than discounting. Don’t panic, there are good reasons for that drop.
“Pickup has finally gone positive in key cities in Europe in July, cancellations still prevail in August and September, but this was expected to reverse. Looking at Spain, for leisure destinations it’s not going to be a normal summer, but the demand is there and the demand is coming back. In the UK, London had between 5% and 10% of business on the books, but cancellations were no longer outweighing cancellations in the short term for the wider UK, although London was flat.”
In London, there was still some group business, which STR related to government or NHS business. For the rest of the summer in the UK, whether staycation demand came to London would depend, Rossmann said: “on what people can do if they come to the city - will restaurants be open? Will museums be open?”
Insight: The future’s bright, the future’s cautious, was the message, but there was certainly hope out there for hotels which were planning to open - not all of them by any means, with city-centre hotels likely to consider whether they hold off until the hoped-for return of business travel in September.
Of course if September comes around and stressed business folk haven’t been able to take a break this summer, don’t expect a rush into conference rooms. At a webinar held a few days ago by Praxi Valuations, Grégory Pourrin, Paris Inn Group, looked to the parlous weather the UK - one of the region’s most important source markets - tends to see in the summer months. He said: “We are still expecting the decision of the UK [government on quarantine]. If people decide not to leave the UK they will probably have the worst summer they have ever seen - they want to find sun, sea and it could be good news for us.”
No Brits will mean relying on the staycation market, traditionally not big spenders. So while summer may yet be salvaged, it may not reap the treasure businesses are hoping for.