In our Forward Star report, which provides a 360-degree view of actual occupancy on the books and pick up, as well as comparing upcoming daily performance with that of the market, there have been some outstanding performances. Despite the looming threat of Omicron and the typically slower winter season, some markets are reporting outstanding occupancy on the books and pick up for the coming weeks and months.
However, forward-looking performance in other parts of the world, particularly Europe, is not as strong, as increased restrictions and an Omicron surge have led to cancellations and fewer new bookings.
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Across most world regions, occupancy on the books declined considerably between January and February 2022, although the difference in occupancy is unrelated to the pandemic. Rather, the uncertainty surrounding health conditions and restrictions has led to shorter booking windows.
Accommodation demand can break down into multiple segments, including:
- Business travel
- Leisure travel
- Group demand, i.e. rooms booked in blocks of 10 or more, as with a conference, event, or even a wedding
Of those segments, leisure demand has returned first and fastest.
The fortunate thing about non-traditional hotel types and non-hotel asset classes is that they tend to be overwhelmingly leisure-oriented, giving them a head start in recovery. For example, when borders closed worldwide, all-inclusive resorts in Brazil tapped into local demand and reported strong performance throughout the pandemic.
In the UK, especially when the country was in lockdown, serviced apartments did very well, running at 80% occupancy as they catered for key workers, healthcare professionals, or people needing to quarantine.
In Europe and parts of Asia Pacific, the move towards ‘poshtels’, or boutique hostels with private rooms, helped to mitigate the impact of COVID-19. The increased privacy and safety provided by a private room alongside budget-friendly hostel ADR helped to draw travelers back into hostels this year.
Even as accommodation performance continues to recover, new development is expected to slow across all asset classes from traditional hotels to alternative accommodation types. Construction growth typically slows as coming out of a downturn as tightened lending standards lead to fewer new projects. What's already in development will come to fruition, but there won't be quite as much replacement in the short term.
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