Like many of you, we here at OTA Insight had felt the shock wave of news updates seemingly by the second when we first began publishing Market Data Insight. At that time, our intent was to provide an overview as to how headlines like “restrictions,” “shutdowns” and “lockdowns” translated into how hotels across different markets were responding and looking beyond comp sets. Thereafter, the hotel open rate per market was added because headlines of ‘hotels closing’ were inconclusive in terms of sheer numbers, locations, and duration.
As cases of Coronavirus spread further and further nations responded - at different times - but mainly in similar ways: stay at home orders and news of closed borders were consistently coming in. However, this level of consistency was not the same with major hotel markets. Pricing behaviour, as well as open and close behaviour varied - attributable in many instances to local or federal regulations. For example, what constitutes the lowest open rates in EMEA at 5-10% across London, Barcelona and Paris in the short term, compares to 30% as the lowest open rate in APAC for Singapore and 20% in North America for New York.
Singapore can be seen as an example of how stricter restrictions upon the ‘second wave’ lead to open rates that had held steady at 70% falling to 30% - perhaps something to keep in mind as countries aim to prevent a second wave of infections - which may result in new or stricter restrictions and materially impact business.
Where messaging is clearly stating reopening dates, we are able to observe from one day to another a 40% to 50% point increase in hotels opening inventory for said reopen dates. New Delhi and Singapore are good examples of this and stand in contrast to most European countries. Countries across Europe communicate extensions to restrictions, or carefully assessed step-by-step approaches to reopening: here hotels open inventory more cautiously and in planned stages too.
Open rates have provided an indication of where markets highly compressed in supply were able to provide the remaining hotels the opportunity to temporarily adjust rates upward again. But observing this over the course of weeks, we speculate that may not have been the only reason: markets such as London have been adjusting the June time window downwards for a few weeks in a row, layering change upon change, just as they had done with the mid-May window, which is now being adjusted up again.
Looking to New York, where the same had been happening to the late April and early May window, we then observed an adjustment of rates slightly upward in the short term. Of course several factors locally will play into this, but it is a noticeable trend across some markets that is in contrast to, for example, Dallas. In Dallas the majority of rate adjustments occurred in late March and early April. As the Dallas market sits at the top open rate in the monitored North American markets at around 90%, fewer and less severe rate changes have been occurring since.
A few months into this crisis, the above examples provide a glimpse of behaviours we can expect. In shifting conditions, it’s clear that hotel operators need to know what type of market behaviour they find themselves in - then make the right, data-driven decision for themselves. Anyone operating hotels in different markets should use the dynamics mentioned above to monitor alongside the news, which will continue to be a key driver in decision making and business outcomes.