Italy (and Europe) hotel results from March to September 2020

This time around, we want to begin our analysis with the cities, and particularly with Rome, Florence, Milan, Naples, Turin, which are among the most representative Italian art towns at the international level.

As stated in previous articles, cities were the only destinations that truly suffered from the crisis. Notably the above-mentioned cities, which are united by the trait of being both business-oriented and leisure-oriented, as well as largely dependent on international customers and the inflow of demand generated by events and congresses.

We decided to aggregate the data of these cities because this year of the Covid pandemic (marked by the absence of major events and non-European international customers) has essentially equalized these cities on various parameters (occupancy, average daily rate, RevPAR).

We also decided to analyze the evolution of the results for these cities from March (month when the nationwide lockdown was instated) to September, comparing the data (occupancy and RevPAR) with the same period last year to offer an idea of how cities are performing in this unprecedented historical period.

The sample examined refers to 3 and 4-star hotels (from 15 to 200 rooms capacity), situated in central locations within these cities, with a solid brand reputation (rated above 8 on, which employ our revenue management services and our Revolution Plus software, and have remained open over the past months of the pandemic, and it does not claim to represent the entire hospitality market in these cities, but simply to offer an idea of how hotels with certain characteristics (described above) located in art towns have been performing during these months of Covid-19 pandemic.

As shown in the graph at the beginning of the article, cities are still lagging behind when compared with 2019 results, but we believe that this data should not only be read, but also interpreted and discussed. And we believe that these are positive results on three grounds.

  • As we have stated repeatedly in previous articles, given that the break-even point (simply put, the point at which expenses and revenue are equal) is statistically achieved at an occupancy range hovering between 30% and 60%, by analyzing these results we can safely say that city hotels, from July onwards, are once again recording positive figures in their monthly balance sheet. In technical terms they have recorded a positive goppar (gross operating profit per available room). And that is the most important thing. Despite the virus, despite travel restrictions, despite the absence of major events, despite the deplorable decisions of politicians and governments. In spite of everything.
  • Although the comparison with 2019 may still seem quite unforgiving, it should be said that growth in cities, month after month, has nevertheless been steady. Slow but steady. And the gap with 2019 becomes shorter and shorter on a monthly basis. The 8% recorded in April is one thing, the 72% recorded in September is quite another matter. And in terms of revenue decreases compared to last year, the -95% recorded in April (the lowest point ever reached) is one thing, the -45% achieved on average from July to September is quite another matter. It is a clear sign that there is a gradual rise in demand for city destinations.
  • The results for September, the best achieved by cities to date, from the lockdown onwards, take on even greater value. While the results for July and August were essentially positive but also conditioned by diminished supply and competition (at least 30% of hotels were still closed), in September we witnessed a performance improvement against previous months despite increased competition (with 10-15% of hotels deciding to reopen precisely in September). This means that the increase in supply has been partly absorbed by an increase in demand. In any case, this is a positive sign.

Clearly, the positive figures for September can be explained by a number of reasons.

A gradual return of corporate customers in the midweek, an uptick in European customers (both business and leisure) as a result of free movement being largely reinstated throughout the European Union (without quarantines and other restrictions), flight regularity within Europe, a gradual return of small and medium-scale events (and what a pleasure it was to witness Fashion Week physically returning to Milan in September, in a clearly different format compared to other years, but nonetheless an encouraging signal indeed). And the fact that facilities remained open, where possible, during all the lockdown and post-lockdown months was instrumental in accelerating the recovery due to the increased visibility provided by OTAs on the basis of the conversion rate (visit-to-reservation ratio) and the increase in positive reviews accrued throughout these months.

Certainly, the future for cities still poses some unknown factors. Over the coming months we should witness, in relation to the increase in the number of infections in the old continent and the necessary coexistence with the virus, a challenging but substantial balance in the domain of free movement between various European countries, and we will presumably see restrictive measures and temporary, limited red zones in some countries which may exert a slight and short-lived impact on the results of this or that city.

However, in light of the current numbers and health situation (which are completely different to those of March and April, in spite of the unbearable media terrorism that always tends to divulge incomplete pandemic-related data without cross-referencing it with other key data), we will not see total lockdown or border closures again (and if we do see them, they will unfortunately be solely political choices and not dictated by health reasons, as seen in Hungary) with related dramatic consequences impacting the hospitality sector.

At the EU level, the issues at stake involve diplomatic and economic aspects that bear on the EU’s very reason for being, and the likelihood of total lockdowns and border closures, aside from lacking any scientific or medical logic at this point and potentially posing a greater threat to health than the virus itself and triggering violent population uprisings, would undermine Europe’s political and economic foundations and severely tarnish the image of those countries that may choose to adopt such measures.

Thus, it is more likely that certain measures (such as rapid tests on departure and arrival at airports or seaports) will be uniformly extended with the aim to reconcile the need to contain and control the virus with the fundamental need to ensure the free movement of persons between EU countries.

In this type of scenario, we will clearly have to expect a substantial stabilization or a slight improvement of current results (also contingent upon an additional percentage of hotels reopening in October), which in any case are sustainable from an economic viewpoint.

Also, one should not disregard the fact that cities have returned to near 2019 levels, at least in terms of occupancy.

It is a sign indicating that the logistical aspects (restrictions on movement and transport) have a much stronger impact than the psychological aspects (fear of the virus), and when restrictions on international movement are relaxed (in this instance only within Europe, as is already the case), the market response is significant.

The return of ADR and RevPAR to 2019 levels is likely to be deferred until next year, when one hopes that the impact Covid-19 is exerting not so much on the health sector (by now we have understood that this pandemic will linger with us for at least two more years) but mainly on politics and media, will finally have faded away. And travel restrictions towards other non-European countries will have been relaxed, the airlines will have resumed long-haul flights and major events will also have made a comeback.

  Seaside and mountain

As far as seaside and mountain locations are concerned, the situation is far more exciting compared with that of cities, a market trend that is shared with other European countries as we mentioned in previous articles.

September turned out to be a sensational month (surpassing September 2019), confirming the excellent trend recorded in August.

In the graphs below we have illustrated the evolution of seaside and mountain results from June to September, and the overall result of the whole season in relation to 2019 (as always, the sample refers to facilities employing our revenue management services and our Revolution Plus software).

We decided to start the comparison from June, because on account of the lockdown all seasonal facilities opened for business in June.

However, the vast majority of them would have opened in June regardless, even if the pandemic and the lockdown had never happened.

This is therefore a reliable comparison over time for most seasonal facilities.

What becomes apparent from these graphs is that after a very sluggish June (weekends excluded), due to various factors (very recent exit from lockdown and related psychological consequences, climate of substantial uncertainty, unfavorable weather, postponed holidays etc.), there was a steady buildup from July onwards with August and September recording significant increases in occupancy, average daily rates, and RevPAR compared to 2019, thus offsetting the decreases of the preceding months and contributing to a final seasonal result essentially in line with that of 2019.

A goal which might have seemed utopian in March, April and May.

Certainly several factors have positively influenced these results, namely the desire to travel after many months of reclusion, the necessity (given the restrictions on international travel) and the psychological preference of many Italians to spend their holidays in Italy (a very strong domestic demand that clearly made up for the lack of foreign tourists), the prevailing preference for open air destinations with lower rates of contagion as opposed to large cities, weather conditions that physiologically enticed travelers towards seaside and mountain destinations, the “holiday bonus” (an economical and tax benefit provided by the government to encourage travel within the country), etc.

The fact remains that the season displayed the classic compensatory trend, and what was lost in terms of revenue in June and to a minor extent in July, was regained during August and September.

The truth is that some seasonal facilities, due to a number of advantageous geographical and organizational reasons, there being the possibility to extend the opening until the end of October, with favorable weather conditions, alongside the current positive booking trend and the constant increase of European tourists, will be able to run successfully also in October and close the season with an increase in revenue compared to 2019.

To conclude, in taking stock of these first post-lockdown months, the emerging picture clearly indicates vast differences between seasonal destinations (seaside, mountain, lakeside) and cities. However, overall, we believe that this is a positive picture that once again demonstrates the resilience of tourism to adverse factors and planetary crises.

And it shows again how in a time of crisis, especially in a time of crisis, revenue management is still of paramount importance to achieve the best possible result.


What has to be done now is to strategically think of next year and consider each and every aspect: for this reason Franco Grasso Revenue Team gives you the chance of a free revenue management evaluation to assess the potential of growth of your hotel and secure the results of 2021.

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