The beginning of the second semester of 2020 offers a breath of fresh air to the hospitality industry as the impact of the easing of lockdown restrictions is improving hotel performances across many countries, with the notable exception of the United Kingdom. However, the continuation of restrictions applicable to international travel and the gloomy economic outlook continue to weigh down on the hotel industry which remains in negative territory.
In July 2020, the European hotel industry saw the occupancy rate of its constructed capacity fall by 58.6 points, its average daily rate excl. taxes by 19.7% and its RevPAR excl. taxes by 66.8%, compared to the levels seen in July of last year. In short, OR reached 32.4%, ADR (excl taxes) 81.8 € and RevPAR (excl. tax) 26.5 €. This result constitutes an improvement with respect to the levels seen in the previous month, highlighting the impact of lockdown easing on the health of the industry. Notwithstanding these improvements, higher-end segments continue to feature the largest declines, as they are more dependent on foreign visitors than more economical categories.
Accordingly, occupancy rate declines ranged from -28.2 points for the budget segment (46.9%) to -57.5 points for the upscale and luxury segments (22.7%), which, combined with decreases in ADR that ranged from -5.8% (budget: 49.1 € excl. tax) to 14.3% (upscale: 137.1 € excl tax), resulted in RevPAR shedding 41.1% (budget: 23.0 € excl. tax) and 75.7% (upscale: 31.2 € excl. tax), respectively.
With regards to specific markets, trends observed during the first semester of 2020 continued to be seen during the first month of the second semester. Most notably, Germany (-41.3 pts. OR / -58.4% RevPAR) and France (-34.2 pts. OR / -54.3% RevPAR) fared better than other markets, as the share of domestic customers in those markets’ nationality mix is relatively higher than in the rest of the continent. Significantly, other markets experienced declines that surpassed the European average (-66.8% RevPAR), notably the countries that are more dependent on a foreign clientele featured the steepest declines. For instance, Italy (-58.5 pts. OR / -80.6% RevPAR), Portugal (-65.1 pts. / -84.0% RevPAR), Spain (-57.8 pts. OR / -79.1% RevPAR) and the Czech Republic ( -63.1 pts. OR / -84.4% RevPAR) underwent some of the steepest declines.
Finally, it is worth noting that the United Kingdom had the worst performance in the continent (-63.9 pts. OR / -84.6% RevPAR), as this market experienced a somewhat late reopening, with hotels allowed to reopen only from the first weekend of July. Other markets hovered around the European average, thanks to a stabilization of prices. Specifically, Austria and Poland managed to somewhat retain the price levels (excl. tax) from last year (-0.1% and -2.6%, respectively), which resulted better than average declines in RevPAR (-64.7% and -62.6%, respectively) despite steep decreases in OR (-53.7 pts. and -45.1 pts., respectively).
Year to date figures ventured further into negative territory, as the effects of the crisis further deteriorate the gains at the beginning of this year; OR is down -41.4 points (30.0%), prizes decreased 13.4% (85.1 euros excl. tax) and RevPAR fell by 63.6% (25.5 euros excl. tax). Yet, these decreases are similar in magnitude to those seen during the previous month, which further suggests that performance continues to stabilize in July.
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