The results for Q1 are in, and hospitality business owners, professionals and students may be surprised to learn that much of the industry is already progressing! On April 28th, we hosted another Hospitality Talks webinar with STR’s Senior Vice President of Research, Steve Hood. This article shares data on the hotel industry’s performance during Q1, along with a forecast for the rest of 2021. Watch the webinar replay to hear Steve’s insights, or read the summary below for key information. 

 

 

We start with an overview of the hotel industry’s performance in Q1 2021 at a global level. Next, we describe how occupancy, the revenue per available room (RevPAR) and the average daily rate (ADR) have fared per country and region, followed by the best-performing cities in Q1. We also illustrate the factors that are driving recovery and signalling hope. Lastly, we estimate which type of demand will pick up and predict when the travel industry will rebound.

For up-to-date hospitality insights, be sure to check April’s Hospitality Pulse here.

 

Hospitality Industry Global Performance in Q1

The hotel industry’s performance has been mixed, and it appears to be recovering gradually based on the 2021 first-quarter results. North America, the Middle East and Australia & Oceania have improved during this time.

Latin America and Northern Africa have also done slightly better as compared to 2020. Some regions like Europe, South Asia, and Southern Africa have seen a dip in performance due to extensive lockdowns and new variants of the virus. Big European cities have seen low performance in general, especially London, Berlin, Paris and Rome. Sao Paolo, Buenos Aires, Mexico City and Marrakech also saw their performance plunge.  

Hotel Occupancy Q1 2021

European cities hotel occupancy April 2020 vs April 2021

Hotel Occupancy in Q1 2021

Q1 wasn’t expected to be stellar in terms of hotel occupancy, but it shows progress nonetheless. Occupancy in North America went up by 1 percentage point, and in Latin America and Africa it went up by 4 and 3 percentage points respectively, compared to 2020. Notable progress was made in the Middle East with an increase of 6 percentage points, and in Australia & Oceania by 5 percentage points. Other areas like Europe went down by 10 percentage points, whilst China went down by 3 percentage points. 

 

Q1 2021 RevPar and ADR

RevPAR % change Q1 2021 vs full year 2020

Vacation Destinations drive ADR above pre-pandemic levels

RevPar, just like hotel occupancy, has improved in the first quarter of 2021. Mainland China saw a whopping 116 percentage point increase compared to 2020. Northern Africa saw an improvement of 14 percentage points, whereas Australia & Oceania saw a 33 percentage points gain.

North America saw an improvement of 19 percentage points, and South America saw an upturn of 10 percentage points. The Middle East saw a 26 percentage point increase. Europe, however, had a 1 percentage point decrease. On the other hand, domestic vacation destinations have driven ADR past-pre pandemic levels in Australia.  

 

Best-Performing Cities in Q1 2021

Hotel Occupancy Actuals Q1 2021

The real growth has spurred from Miami, Moscow, Shanghai, Auckland, Singapore, and Dubai in Q1 2021. Delhi and Mumbai were also doing well until the second wave hit India in Mid-April. Cities like Madrid, Vancouver, Toronto, Istanbul, Beijing, Sydney, Tokyo and Hong Kong have fared decently. North American cities such as New York, Washington DC, Los Angeles and Chicago are not far behind.

Luxury hotels and resorts in the Maldives, Sanya and mainland China have done exceptionally well during Q1. In the gold coast and Sydney, travel has surged even though ADR hasn’t dropped.

 

Factors that Illustrate Hope and Can Further Influence Travel Recovery 

  • Now that vaccination is speeding up across the EU, the European Commission has announced its intention to ease restrictions on non-essential travel. Vaccinated visitors and tourists from countries with low infection rates should be allowed to travel to the EU from June 2021 onwards.
  • The UK already relaxed some of its lockdown rules on April 12th and is set to ease more measures on May 17th, such as allowing international travel. The only caveat is that they are likely to grant fewer than 10 EU nations a green light status.
  • Ireland is also set to retract its lockdown measures a few weeks after the UK does.
  • Hospitality in Dubai and the rest of the Middle East is likely to spike after the Ramadan period ends.
  • Singapore and Hong Kong have also just announced a travel bubble, which has been temporarily delayed due to increased cases in Hong Kong. 
  • The UN climate conference in Glasgow has already resulted in 90% occupancy and reservations in both Edinburgh and Glasgow.
  • Sporting events and entertainment concerts planned in Edinburgh have further boosted reservations in the city.
  • Israel will be opening borders soon to boost tourism to and from the country [1], just like Iceland did in March 2021 [2]. 
  • 8 new airlines have sprouted since the beginning of 2021 and are currently in the start-up phase [3]
  • Large hotel groups in India, China, Australia and New Zealand have seized the opportunity to expand their business during the first quarter, which signals hope to the rest of the sector. Accor, e.g., opened 56 hotels in Q1 2021, representing 7,100 rooms.

Recovery by Demand

Hotel occupancy on the books for the next 365 days as of 1 February 2021

Demand will pick up globally this year, but it will differ by region. The pent-up demand for leisure travel will cause a surge, followed by the demand for domestic tourism. Demand for international travel, events and business will be the last to recover.

The highest growth in demand will be seen in Dubai and Beijing, followed by London and Bangkok. The Netherlands and Switzerland already see higher growth than France, Italy and Belgium. Hospitality businesses that hire through Hosco aspire to reactivate hiring by the end of June 2021.

 

When Will Travel Rebound?

The good news is that travel is set to pick up from Q2 2021 onwards, with the onset of summer reservations being a great help. This rebound is already visible from the April 2021 numbers, which indicate increased bookings for global events until 2022.

The recovery of the travel sector will be mostly dependent on the ongoing success of mass vaccinations in Europe and the US. These effects will also be notable for travel between the western and the eastern hemisphere and will allow for a return to pre-COVID-19 levels by Q4 2022.

All market forecast excluding China - Hotel occupancy 2020 & 2021 vs 2019

Hotel booking demand close to peak by Q4 2022

 


Sources: 

[1] Israel To Open International Travel To Vaccinated Tourists In May (Alex Ledsom, 13th April 2021 - Forbes.com)

[2] Iceland Welcoming Vaccinated American Visitors (Ben Schlappig, 17th March 2021 - Onemileatatime.com)

[3] A look at the startup airlines entering the market in 2021 (February 2021 - Futuretravelexperience.com)