Inner Circle: Thomas Emanuel, director, STR


In what has become increasingly apparent, the global hotel industry is seeing a noticeable impact in performance amid the ongoing outbreak of COVID-19.

Before addressing that impact specifically, it is important to remember where the industry was positioned at the beginning of the year. Hotel demand had been growing at a healthy pace across major global markets. Increased supply growth, however, had started to have an impact on occupancy, and subsequently, revenue per available room (RevPAR). In 2019 specifically, the Asia Pacific region reported a 3.3% decline in RevPAR, while Europe (+2.2%) and the U.S. (+0.7%) saw considerable slowing in growth in this industry standard metric.

Fast forward several weeks, and aforementioned decreases as a result of the COVID-19 outbreak became most noticeable in Mainland China as a shutdown was instituted the day before the official Chinese New Year celebrations began (23 January). The market saw an 89% occupancy decrease within two weeks (15-29 January) with all classes of hotel affected. For 22 consecutive days, occupancy levels remained below 10% in Mainland China.

At the market-level, the largest decrease was seen in Sanya, where a 94% RevPAR decline was seen in the 28 days ending with 2 March. This was followed by Macau (-92%), Shanghai (-88%) and Hong Kong SAR (-87%). This further exacerbated the declines that Hong Kong had been experiencing since protests began in the market last year.

Other countries across the Asia Pacific region have also seen sharp occupancy declines, which have been worsening by the week. South Korea, Singapore, and Japan led that unenviable list with occupancy declines of 73%, 66%, and 61% respectively, for the week of 2 March.

As COVID-19 has spread across the globe, the impact has extended to other hotel markets. European cities are now beginning to feel the full impact. The mixture of a reduction in leisure travel, multiple corporate travel bans, and a large volume of events being cancelled has proved incredibly challenging.

Unsurprisingly, with the most number of cases of COVID-19, Italian cities are seeing the largest declines. The week of 2 March produced occupancy of just 8% in Milan, a decline of 89%, while in Venice, occupancy was 9%, a decline of 84%. Both Florence and Rome also registered occupancy of less than 20%. The chart above clearly demonstrates the correlation between the increase in COVID-19 cases and occupancy levels. 

Other European cities are also far from immune to declining performance. Again, looking at the week of 2 March, London saw occupancy decline 22%, Amsterdam by 25%, Paris by 31%, and Athens by 45%. Impact on average daily rate (ADR), however, has thus far been limited.

The Middle East posted a promising start to 2020 due to school holiday shifts driving positive performance during January. Dubai, for instance, posted a 17% increase in occupancy the first 19 days of the year. After 20 January, however, the market saw an 8% decrease in occupancy due in part to the COVID-19 outbreak. This impact has continued across the region. The week of 2 March saw Egypt’s occupancy decline 20%, Saudi Arabia’s occupancy fall 36%, and the United Arab Emirates’ occupancy as a whole dip 25%.

Previous outbreak situations, such as SARS can be used as an indicator of performance impact timelines. However, the situations are not directly comparable, and it is important to consider the significant differences across influencing factors of the past two decades: STR’s data sample was significantly smaller in Mainland China, there’s also been a significant supply increase in hotels, and travel has increased substantially across the globe, most notably with Chinese outbound travellers.  

As STR previously analysed, data from 2003 displayed China’s ability to bounce back quickly following the containment of SARS, when Mainland China’s hotel performance recovered in just three months. However, due to the vastly different scenarios between SARS and COVID-19, it remains too early to draw conclusions on how long the hotel performance impact will last this time around. We do know the impact is significant and will continue to monitor global data and report on changes in performance.


Tom is part of the Inner Circle, a group of industry leaders and innovators we have brought together to help us contribute to debate in the sector.