COVID-19 has posed a significant challenge in terms of planning for recovery, as many questions remain unanswered. Both the timing and the shape of recovery for the travel industry has remained elusive to hoteliers and agents alike.
As travel and hotel stays begin to steadily, but slowly, increase across the globe, what data patterns do hoteliers and agents need to keep at top of mind as we wait for a return to normalcy?
Below, we’ve broken down two key global and U.S. trends that are shaping our outlook for hotel and travel agency recovery in the aftermath of COVID-19.
Average daily rate (ADR) trends
Year-over-year commissionable stay data indicates that hotel ADR is increasing at a lower rate than actualized stays, according to new figures from the Onyx CenterSource global data platform, OnyxComp.
Analyzing OnyxComp data, global commissionable confirmed stays declined an average of 84.3% year-over-year for the 4-week period leading up to June 20. This steep decline is to be expected.
Many hotels remain shuttered, as more than 57% of hotels self-reported in April that they were closed for business as recently as April, and many more are battling low occupancy.
But OnyxComp has seen consistent week-over-week growth in confirmed hotel stays since reopening efforts began for many US states at the beginning of May, and the forward momentum has continued despite some states pausing or rolling back reopening plans in light of increased COVID-19 cases.
This growth in hotel stays may be misleading from a revenue standpoint, however.
Analyzing the same trends through the lens of agency commission revenue over the same 4-week period leading up to June 20, we see an annual decrease of 93.1%, indicating that ADR is slower to progress to the previous year’s performance when compared to actualized hotel stays.
What might be causing this slower restoration of ADR to pre-coronavirus numbers? For one, hotels may be lowering room rates to entice travel-shy visitors.
Another explanation is economy hotels drawing more visitors than luxury hotels, as the data shows luxury hotels are slower to recover than economy in recent confirmed commissionable stays.
It’s no surprise that luxury hotels see higher daily rates than economy lodging, so the faster return of economy bookings and stays, and the slower upward momentum of luxury, will continue to negatively affect ADR.
Economy vs. luxury trends
It’s clear from OnyxComp data that non-luxury hotels have seen the biggest growth since the beginning of the pandemic. Early April saw the largest weekly decline in non-luxury and economy stays with a 94% lose in volume.
As we entered May, growth began with week-over-week percentage increases varying with an average of about 27% growth per week. Towards the end of June, non-luxury and economy stays had increased more than 650% from April’s dire lows.
The same growth has not been realized in that timeframe for luxury hotels. While these hotels have also seen week-over-week growth, luxury has lagged behind the promising increases shown by other non-luxury accommodations.
Confirmed stays dropped annually by nearly 98% at the beginning of April with the surge of COVID-19, with week over week gains of an average of 20% into the end of June.
Overall, luxury hotels’ confirmed stays have increased nearly 412% from April towards the end of June, but still lag far behind the 650% growth of their non-luxury counterparts.
Economy lodging has seen a more rapid growth during the COVID-19 crisis due to a few different factors, the largest of which is the continued demand for business travel.
While videoconferencing platforms have sufficed in the short term as a means of communication for businesses, there is a growing demand for the return to normalcy.
Business travel nearly halted in the beginnings of the global crisis, but as nations begin to recover and US hotspots start to regulate with policies on mask usage and social distancing, essential business travel has seen weekly increases that have yet to be realized in the leisure market where luxury hotels hold their revenue.
Since business travelers traditionally book non-luxury accommodations, the stronger resurgence of economy lodging makes more sense.
Economy lodging is known for a lower ADR than luxury hotels, so we can expect to see trends for both ADR and for luxury and non-luxury confirmed stays to climb at a similar pace throughout recovery.
What can hotels and agencies do to prepare for recovery?
While Onyx will continue to monitor and report on trends associated with hotel and travel agency recovery via OnyxComp, there are additional steps that can be addressed by hotels and agencies to maintain a semblance of normalcy during these times.
Onyx recently conducted a webinar that addresses the unique needs of travel professionals as we navigate the new normal and prepare for recovery.
Watch the on-demand webinar today to hear industry experts give their thoughts on how we got here and how we can move forward together.
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