Everybody talks about Covid-19 and what impact it might have on the travel and hotel industry. We have seen critical developments in Asia on ADR published by STR last week, with drops over 50% in some cities in Asia. We also talked to many of our clients in the last days, and the overall feedback is that cancellation rates currently are extremely high in almost all destinations (not only Berlin because of ITB). As far as we can sum it up, it is nevertheless very much connected to big events, groups etc. Apparently individual travelers don’t react as panic driven, as group & event organizers.
What is demand doing?
Of course, at myhotelshop we have almost real time data on search behavior, managing the online marketing campaigns and meta search visibility of over 2500 hotels worldwide.
Covid-19 really hit Europe last week. And it is almost a daily evaluation that we have to consider, as it spreads country by country. So, what happened last week? We looked at two things:
1. How did the week over week traffic behave? So how did traffic grow or shrink on Google Hotel Ads, Trivago and Tripadvisor?
We looked at 4 days comparing the 15th to 18th February to the 22nd to the 25th February.
As you can see, the only real extraordinary decrease is in Italy. Even though it looks very red, don’t forget that we had carnival in many countries. So, the decrease is also partially seasonal and something that we also witnessed the years before in that last week of February.
The only City where we saw an above average decline in Germany was Munich, with around -31,5%.
2. How did year over year traffic behave?
Not that easy in terms of data from our side, as we significantly increased our portfolio of hotels in some countries year over year, but still worthwhile checking it out.
Again it is Italy not surprisingly. Demand crashes and we can see what a negative impact Covid-19 can have if an outbreak is recent.
We believe it is obvious that demand is very much influenced by media and publicity in this case. How strong it can be, can be seen above. From a marketing perspective we have good news: as we work with our clients on a pure success based model, with decreasing demand, traffic drops and therefore also costs. We see conversion rates being stable, so in the end with declining traffic, costs also decline as much as revenues. In crises like these fixed costs are much more a concern for hotels, as with decreasing revenues, those fix costs such as labor, other agencies, consultants, etc. can harm the bottom line significantly.
But stopping marketing activities on variable costs in times of crises is definitely the worst decision you can make. It will make your visibility disappear and it will cost you three times more to gain it back once the crisis is over (which can be in one month maybe already).