ITB Berlin, the world’s largest travel trade show, was canceled Friday evening due to the spread of novel coronavirus COVID-19 in Europe. The travel conference and trade show brings together industry people from around the world for tourism promotiom was scheduled to begin March 4, 2020. The travel show was expected to attract 160,000 visitors over five days March 4-8. That is a huge number of room cancellations for Berlin and a sudden hard hit on the hotel industry in the city.
This is but one of several major business conferences and events around Europe that have been canceled over the past week. Switzerland’s government banned all public and private events within the country bringing together more than 1,000 people, until at least March 15. Barcelona canceled the Mobile World Congress scheduled for last week with its anticipated audience of 100,000.
Cyclists, including former Tour de France winner Chris Froome, were quarantined in hotels in Abu Dhabi during the Tour of the UAE cycling race on Thursday after two Italian coaches were suspected of having coronavirus. The final stages of the cycling race were canceled. Quarantined riders who have tested negative for COVID-19 were leaving UAE today.
Hotels will be hit hard in 2020 like in 2008-09.
The financial markets collapse in fall 2008 and winter 2009 saw unprecedented hotel rate drops in the USA. Rate drops went against market research on how to weather the downturn of fewer guests. Maintaining a base rate for hotel rooms within your hotel market segment was the advice for hoteliers, but it went unheeded by many. As business and conference group travel dropped precipitously, hotels turned to online travel agencies to market and drive demand for hotel rooms. Rates declined across the board with the greatest rate drops in higher end hotels.
The consumer was the winner.
Following the rate drops of early 2009, hotel loyalty program offers for free nights with every two or three stays became widespread across different hotel chains in 2009 and 2010 as travel slowly picked up again. Upper upscale and even luxury hotels in San Francisco available for $100 to $120 per night for much of 2009, combined with a free night every two stays offered real deals for travelers.
Money vs. health – Why 2020 might be different than 2009.
Over the past week I have studied airfare and hotel rates in different places looking for signs of the downturn. Single-digit occupancy for hotels in Hong Kong is a significant downturn. My general survey of hotel rates in Amsterdam, Prague and Rome for rooms this coming week show what I consider to be relatively low room rates for numerous hotels in these cities. There is still limited data to work with other than my informal surveys. While January hotel data showed positive metrics for European hotels, February and March data will provide indicators of how the hotel industry is impacted by COVID-19. Over the next two weeks there should be more official hotel rate data in Europe to assess the impact of the recent coronavirus outbreak in Italy and impact on travel around Europe. It appears the impact on travel as shown by data statistics will likely be seen in Europe before the USA. Time will tell.
Yet, unlike in 2009 when concern for our money was the primary issue, can lower room rates or loyalty incentives like free night promotions attract people to hotels when they are concerned for their health?
The tourism industry will see a significant impact in reduction of hotel demand and there will likely be a flattening or reduction in global air travel as coronavirus COVID-19 wends its way from community to community around the world in 2020.
While it is hard to predict is what impact we will see on specific airlines and hotel chains or how long travel disruptions will last as COVID-19 outbreaks appear across the globe, I anticipate we will see at some point later this year higher value loyalty program incentives when the travel industry seeks to motivate us back into hotels and onto planes and recreate a desire for travel.