Resilient ADRs and leisure destinations as the game changers in 2021
After a very difficult 2020, this year has shown some positive signs of light for the hotel industry. High demand for rural/leisure destinations coupled with resilient ADRs have proven to be the game changers in 2021.
After a very difficult 2020, this year has shown some positive signs of light for the hotel industry. For example, looking at Europe this summer, after various regional and country lockdowns, a positive development appeared on the travel horizon mainly fuelled by domestic leisure travellers. After months of restrictions, people simply wanted out. Throughout Europe, we saw rural regions as well as coastal destinations, “Sol&Playa”, being the first ones to report positive movements driven by local and national markets on a short booking window. Secondary and tertiary destinations reported good occupancies again. However, the classic primary city destinations, remained far behind their pre-pandemic performances.
2019 was one of the best years for our industry with strong RevPAR performance. In contrast, 2020 was a year of nearly complete standstill while 2021 has seen a recovery of various activities and events despite intermittent restrictions and ongoing limitations. As people felt the need to escape from their confinements in home offices, the shoulder seasons also showed increased occupancy levels for domestic getaways and workcations.
Unlike what we have seen in previous crises, rates have for the most part held their ground while occupancy levels slowly recover from some all-time lows! In some regions ADRs even improved, but what happened?
Based on the data of 350 hotels in the DACH region collected by HotelPartner, the reasons can be found in strong demand for rural destinations, lower price resistance and better yielding. The following chart shows the ADR development in city and regional vs. 2019 for the sample.
Comparing May to December 2021 (until 14.12.21) ADR’s with the same months in 2019, the rural hotels in the sample achieved average daily rates that were between 17 % and 30% higher in the shoulder months of May, October and November. On the other hand, city hoteliers were not as successful in holding or increasing their rates. In every month except August, urban hoteliers saw declines in their ADR compared to 2019 levels, and the gap between rural and city hotels ranged from four percentage points in the summer months to 35 percentage points in the shoulder seasons.
High demand for rural/leisure destinations coupled with resilient ADRs have proven to be the game changers in 2021.
By Stephan Reichelt
Director | Manager Asset Management
HotelPartner is an internationally based performance management company founded in 2006 to help hotels optimize their revenue management efforts.