How will summer holidays impact hotel performance in Spain & Portugal?

July and August are two of Spain’s and Portugal’s most important hotel performance months with travelers spread across the two countries on summer holidays. However, even with expanded vaccinations, economic reopening and travel sentiment, summer 2021 will be far from normal in the Iberian Peninsula.

Before we get into some forward data and address the hotel performance expectations for the summer, let’s add some historical context as our starting point.

Occupancy Timeline

Thanks to limited domestic demand, Spain and Portugal hotel occupancy percentages have improved from low points of the past year but remain far behind pre-pandemic levels. The lifting of travel restrictions and lockdown measures will provide a much needed influx of guests for hotels coming back online.

In April 2021, Spain posted a 25.6% occupancy level, which was slightly below March (26.4%) but was the country’s second highest occupancy level since August 2020.

Portugal, on the other hand, saw occupancy reach 14.4% in April, its highest level since October 2020 (23.1%).

ADR improvement in leisure destinations

During the first quarter of the year, leisure markets in the region saw rate growth, even from 2019 levels, because of domestic leisure business and less competition for those guests.

Marbella Area’s ADR for Q1 2021 was EUR186.04, up from EUR120.34 in Q1 2020 and EUR122.01 in Q1 2019.

The Balearic Islands’ ADR was EUR98.64, up from EUR81.84 in Q1 2019 and EUR77.37 in Q1 2020.

Algarve, one of the most popular leisure destinations in Portugal, posted Q1 2021 ADR at EUR73.30 after coming in at EUR62.65 in Q1 2020 and EUR62.57 in Q1 2019.

What’s next?

Although occupancy on the books remains low, the Canary and Balearic Islands are still ahead of Madrid and Barcelona. Travelers are still awaiting confirmation of softened travel restrictions, which should be immediately followed by a sharp increase in demand.

For the next 90 days (as of 31 May), Balearic Islands occupancy on the books sat as high as 24.9% and 24.7% on 6-7 August (Friday and Saturday), respectively.  The Canary Islands show the highest peak on 7 August with occupancy on the books as high as 23.9%.

At the same time, Madrid occupancy on the books remained below 20% for the next 90 days due to guest tendency to book at the last minute. As we noted in a previous article, it is important to remember that the pandemic has shifted guest tendency toward shorter booking windows.

Business on the books in select Barcelona hotels shows a spike in late June due to the rescheduled Mobile World Congress (28 June-1 July 2021). Looking forward to late June, Barcelona’s occupancy on the books is below 15% for the event period. Because of the pandemic, unfortunately, cancellations could also be more prevalent if the situation is not improved.

Occupancy-on-the-books intelligence will help pinpoint recovery and provide much-needed context. Those insights can be accessed for free when you submit your data. If you are interested, please email sales@str.com.

For more information about our occupancy on the books data, check out Forward STAR