COVID-19: Manhattan RevPAR plummets | Tracking travel demand

PwC: Manhattan RevPAR sees 29% decline

In March, the COVID-19 pandemic brought a stay-at-home order to Manhattan. During the month, over 60 hotels were temporarily closed and many others were repurposed as hospitals in an extraordinary attempt to combat the virus. As a result, according to data from PwC, first quarter RevPAR experienced a year-over-year decline of 29.1%. This represents the largest first-quarter decline in RevPAR since Q1 2009 when the financial crisis led to a year-over-year decrease of 32.5%. While occupancy posted marginal increases during the first two months of the year, a 63.4% decline in occupancy in March and a 15.2% decline in ADR drove the overall decline in RevPAR for the first quarter. Of the four market classes tracked, upscale properties exhibited the most notable year-over-year decline in RevPAR during the first quarter, decreasing by 31.8% from prior-year levels. For upper upscale hotel properties, where occupancy fell 24.7%, Q1 RevPAR was down 30.5%.

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Hyatt extends cancellation policy

Hyatt Hotels Corp. announced that it was extending its cancellation policy: With some exceptions,

reservations booked July 1, 2020 and beyond, for arrival dates through July 31, 2021 – can be cancelled at no charge up to 24 hours before scheduled arrival; it includes advance purchase rate reservations.

U.S. hotel performance: More incremental gains

Data for the week of 24-30 May showed another small rise from previous weeks in U.S. hotel performance, according to STR. Year over year:

  • Occupancy: 36.6% (-43.2%)
  • ADR: US$82.94 (-33.3%)
  • RevPAR: US$30.34 (-62.1%)

Previous weekly U.S. weekly occupancy levels: 

  • 17-23 May 2020: 35.4%
  • 10-16 May 2020: 32.4%
  • 3-9 May 2020: 30.4%
  • 26 April – 2 May 2020: 28.9%
  • 19-25 April 2020: 26.2%
  • 12-18 April 2020: 24.4% 
  • 5-11 April 2020: 22.0%

Aggregate data for the Top 25 Markets showed larger year-over-year declines than the national averages: occupancy (-51.1% to 33.9%), ADR (-41.5% to US$86.82) and RevPAR (-71.4% to US$29.48). Six of those markets saw occupancy levels above 40%: New York, New York (47.6%); Norfolk/Virginia Beach, Virginia (44.2%); Tampa/St. Petersburg, Florida (44.0%); Phoenix, Arizona (42.5%); Atlanta, Georgia (40.7%); and Detroit, Michigan (40.4%). Markets with the lowest occupancy levels for the week included Oahu Island, Hawaii (12.5%); Boston, Massachusetts (22.6%); and Orlando, Florida (24.5%). 

Travelodge prepares to launch CVA plan

Hotel chain Travelodge is preparing to launch insolvency proceedings in the form of a company voluntary arrangement (CVA) in an attempt to cut its rent by about 40% over the next 18 months and save 10,000 jobs. The company has been in a battle with its landlords since the end of March when it refused to pay rent for the year’s second quarter. All but a handful of its 564 hotels have remained closed during the lockdown. Travelodge is owned by investment firms including Goldman Sachs, Avenue Capital and GoldenTree and has £100 million (US$125 million) in cash reserves. Its shareholders have pledged to inject up to £40 million (US$50 million) in new equity into the business and raise £100 million (US$125 million) in new debt as part of a turnaround plan.

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Tracking travel demand

To help formulate a response to challenges presented to the travel industry during the era of COVID-19, The International Air Transport Association (IATA) and McKinsey have partnered to develop a dashboard that provides the industry with a current and comprehensive view of travel demand and indications of recovery. “Air Travel Pulse” summarizes the traditional leading travel-demand indicators (such as air-travel search and ticketing data, flight schedules, and cancellations) with other public data sources (such as travel restrictions, online search behavior, and other traveler activity). The goal is to allow airlines and other travel-sector participants to better gauge the progression of the booking funnel, deploy capacity, allocate marketing resources, and adjust pricing in the months ahead.

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45% of Chinese willing to travel overseas: Survey 

A majority of Chinese intend to travel in 2020, according to a joint survey conducted by the Ivy Alliance Tourism Consulting, China Comfort Travel Group (CCT), and Pacific Asia Travel Association (PATA), which was discussed by a panel of experts at the recent Virtual ATM China Tourism Forum. The survey found that 60% of Chinese intend to travel in 2020 and 45% are willing to travel abroad. According to China Tourism Academy, 155 million Chinese tourists travelled overseas in 2019. Chinese visitors spent US$277.3 billion in 2018 making it the top outbound market. 

Read more at Trade Arabia 

Asia Pacific hit hard by second wave of COVID-19

A second wave of coronavirus cases, in areas such as Singapore and Hong Kong, resulted in a new ramp up of containment measures. The result was a 124.1% YOY plunge in GOPPAR to a historical low of -US$13.92 for the region, according to data from HotStats. Occupancy in April was down by 52.9 percentage points compared to the same time a year ago, and average rate declined by 39%, resulting in a RevPAR falling 83.8% YOY. With other revenue centers virtually closed, there was nothing to compensate for the rooms slump, and TRevPAR fell by 83.3% YOY, hitting its lowest level on record. Expenses across the board also continued to fall in April. Total labor costs were slashed by 49.5% YOY, led by cuts in rooms (down 53.3% YOY) and F&B (down 51.3%). Overhead costs followed suit, falling by 51.3% as credit card commissions evaporated and utility expenses decreased by 54.0% YOY. In all, profit conversion in Asia Pacific was recorded at -50.9% of total revenue, 86.2 percentage points below April of 2019.

Israel’s new standards for reopening and operating

Israel’s Ministry of Tourism and Ministry of Health have outlined a new “Purple Standard” for operating hotels in the country. For hotels to remain in compliance with the new standard, they must reach and maintain several benchmarks outlined by Ministry of Health officials that will deem the property safe for travelers. Though a date has not been set on when international travel will open again, the Ministry of Tourism is working to implement safety measures across all aspects of travel within Israel, beginning with the “Purple Standard” protocol. Procedures include:

•   Universal rules of conduct for reducing infection, which includes wearing a face mask in all public spaces, maintaining a distance of a minimum of six feet apart, and frequent hand washing

•   Guidelines for reopening of hotels which include benchmarks for pre-opening preparation, cleaning and disinfecting protocols, guidelines for cleaning the hotel water systems (such as pools), and a dedicated staff member to oversee all health and safety procedures

•   Outlined guidelines for operations once the hotel is open, which include temperature checks for all staff, guests and visitors, installation of transparent plexiglass partitions at reception desks, clear signage detailing health and safety measures and restrictions to the number of guests in an elevator at one time

•   Kitchens and dining rooms at hotels will only be reopened once they have met the guidelines issued by the Ministry of Health. All staff will be required to wear face masks and gloves while all seating will be arranged in accordance with social distancing measures. Dining hours will be expanded to allow for proper distancing