Coronavirus outbreak: Hotel performance analysis for Europe

STR continues to monitor the hotel performance impact around the outbreak of novel coronavirus (2019-nCoV). To this point, we have focused on the immediate impact in Mainland China and key outbound destinations in the Asia Pacific region.

Next we examine Europe, which according to Tourism Economics, welcomes 15% of Chinese outbound travel. That number is of course much smaller than the 80% of Chinese outbound travel that stays within the Asia Pacific region, but several countries in Europe are key destinations for the Chinese traveler. Within Europe, France, Russia and Germany are the top countries for Chinese arrivals.

In examining key markets around Europe, we have not yet seen a noticeable impact on overall hotel performance. However, an impact is visible in specific locations: airport hotels. As a reminder, STR defines airport hotels as those properties in close proximity to an airport that primarily serve demand from airport traffic (distance may vary).

For the purpose of this analysis, we look specifically at Heathrow Airport, Paris Charles de Gaulle Airport, Frankfurt am Main Airport, Dublin Airport, Milan Malpensa Airport and Amsterdam Airport Schiphol for the two-week period between the 20 January and 2 February.

Notable dates to remember are 24 January (Chinese New Year day), 30 January (global emergency declared by the World Health Organization) and 28 January (various international carriers began cancelling flights in and out of China). Many of these airlines, such as British Airways, Lufthansa and Air France, have suspended flights until the end of February or end of March.

• Frankfurt airport hotels began to see a steady decline in both occupancy and average daily rate (ADR) on 30 January, leading to consistent decrease in revenue per available room. The submarket’s worst RevPAR decrease (-21%) occurred on 2 February.  
• Heathrow and Charles de Gaulle show decreases beginning on 27 January. Heathrow’s steepest RevPAR decline (-30%) came on 30 January, whilst Charles de Gaulle’s RevPAR fell the hardest on 29 January (-24%).
• Dublin airport hotel declines start a bit later on 31 January, but more so in ADR than occupancy. On 1 February, ADR fell 21%.
• Schipol occupancy dips were visible as early as 24 January and reached their worst on 26 January. However it is worth noting that we saw worse declines earlier in the month due to St. Nicholas Day. In terms of RevPAR comparisons, 2 February was the worst day for this submarket (RevPAR: -30%).
• For Milan Malpensa, the patterns are different because that airport is not as dependent on Alitalia direct routes to China as the others included in this analysis.
• Not included in the charts: Rome is the top city in Europe for Chinese arrivals, and its airport, Leonardo da Vinci-Fiumicino Airport, began to see performance declines in 31 January.

STR will continue to monitor global data and report on changes in performance. China outbound travel to Europe will be affected for some time to come, what remains to be seen is whether the general perception towards travel within Europe and around the world is negatively affected and results in reduced travel.

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