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Positive summer for Spain’s hotels
Monday, 4th October 2021
Source : Sarah McCay Tams

Average daily rates held strong against 2019 figures, as hotels in Spain focused on their domestic market and loyalty segments during summer 2021.

(According to industry leaders taking part in the ‘Balance of summer 2021 and future forecasts in a post-Covid environment from the point of view of Revenue Management’ webinar, hosted by the Universidad Rey Juan Carlos (URJC) Academic Programs of Revenue Management and Hostelur)

Pilar Talón, Director of the Revenue Management programs of the URJC, opened the webinar with a summary of data from the summer, noting that average room rates for July 2021 had returned to July 2019 levels. However, RevPAR remained lower, with hotels running at an average of 25% less occupancy in July 2021 compared to pre-pandemic levels.

“In the European market, we can see the appetite for travel continued to increase in recent months and that it has been a positive summer compared to 2020, although it has not reached the levels of 2019. The pace of bookings has increased exponentially during the summer and ahead of 2020 figures (49% more for August), a more modest increase for the rest of the year and turns negative from January, underlining the inability and aversion of consumers to make long-term plans,” Blaj told the audience.  

Gloría López, Head of Revenue Management at Braintrust, explained how harnessing domestic demand for ‘staycations’ had helped all destinations this summer, with positive impacts on occupancy and less erosion in average price that was expected.

“There was a pent-up demand effect and a lot of desire to travel, which meant people didn’t lose the purchasing power, allowing hotels in many cases to achieve rate results very close to 2019,” she said.

Forecasting Challenges

Managing last-minute demand was seen as one of the main challenges of the year, along with a much shorter summer season.

“Hotels, in general, had a good August. However, the difference with pre-pandemic years lies in the short duration of the summer, since due to the low demand generated by international clients, the occupancy rates for September and October are expected to be very low,” said Angel Sotocasa of Accenture.

“The uncertainty in demand until the last minute, especially in some holiday destinations, has generated a lot of difficulties when it comes to forecasting," agreed Gloria López of Braintrust.

Cristina Blaj of Duetto explained how the focus now needs to shift from forecasting to strategy. “Incorporating data with visibility into the future, monitoring micro trends in consumer behavior, and driving conditional pricing considering lead time and unconstrained demand using open and flexible pricing strategies, is essential. The focus has shifted from forecast to placing the commercial strategy in the middle of the decision-making process and letting the forecast become a result of the strategy and the demand itself,” she said.

Patricia Diana of Ideas added: A robust forecast always has to take into account various types of data, but in crises such as this one, we have come to understand any small movement in demand that is occurring in the short, medium and long term generates a key difference in the management of revenue.”

According to Neville Isaac of Beonprice: "Now more than ever, hotels need to do more with less. Technology facilitates this process: with a Revenue Management system, tactical decisions can be automated, freeing revenue managers from operational tasks and facilitating strategic thinking.”

Success for Paradores

One success story celebrated on the webinar was that of Paradores, which has more than 90 hotels across the country. According to Fernando Vives, Chief Commercial Officer of NH Hotel Group, Paradores has seen its best results in 15 years.

Juan Manuel Merino, Head of Revenue Management of Paradores, explained how the brand focused on providing great value to members of its loyalty program ‘Friends of Paradores’.

Merino also talked through some of his commercial strategy and results, explaining how May 9, 2021 (the date Spain’s government ended its state of emergency) proved to be a record day for hotel bookings via the Paradores website, and that “marked the beginning of a considerable increase of bookings for the summer."

Removing Revenue Silos

According to Miguel Afán, Partner at strategy and marketing consultancy, Simon Kucher, COVID has highlighted the need for a fundamental change in the generation of hotel income. He told the audience revenue can no longer operate in a silo, but rather needs to be integrated with sales, marketing, and operations.

Concluding, Talón of URJC said: “This holistic vision of a flywheel management model is one of the most important conclusions that this crisis can offer us of how to manage our hotels.”

Duetto’s Director of Sales for Southern Europe, Cristina Blaj, provided the audience with a snapshot of data from the most recent Pulse Report.

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