As the virus spreads, governments around the world are taking action to protect their people. In most cases, this takes the form of travel restrictions, or “stay-at-home” orders, such as the one announced by the United Kingdom yesterday. We’ve examined some of the cancellation trends we have seen as a result of travel bans, but what about the bookings that are still coming in? What can the data tell us about those? While it will come as no surprise that the number of reservations continues to fall almost everywhere, we wanted to take a look at the reservations that are still coming in and analyze the changes in Average Daily Rates (ADRs).
Below is a chart that compares the percent difference in ADR for reservations booked before and after the respective country implemented some level of nationwide travel restriction. It looks at the bookings based on the date of stay, rather than the date of booking. Looking at it this way we can see both the degree to which ADRs have fallen, as well as observe the trend over time since a travel ban was implemented.
As an example, in Australia, for April 9th (20 days after a travel ban was implemented on March 19th) bookings made after March 19th had ADRs that were down -39% when compared with those made before March 19th. In other words, a night that was previously booking for $100 a night was now booking for $61 a night.
In most cases ADRs were already faltering before a national travel ban was put in place. In many cases, regional ordinances were already in effect, and a general reluctance to travel was also having an impact on short term rentals (STR). From the chart above we can see that ADRs booked after the travel ban went into effect were drastically lower, as property managers vied to pick up on any additional occupancy. On average, ADRs were in the realm of 25-30% lower immediately following the announcement of a travel ban, and continued to fall over time, around 0.8% day over day for 30 days before leveling off.
Looking at the individual countries highlighted in the chart we can see that ADRs have responded somewhat differently. Italy and Spain have been taking on Coronavirus in the public eye, and of the countries highlighted in the chart have experienced the largest drop in ADRs. The United States has fared the best so far, most likely due to its strong domestic travel and vacation markets that were less impacted by the international travel ban. However, a 30% reduction in ADR is still an unprecedented drop in rates.
It is worth noting that we did not take bedroom size into account. Filtering for only bookings made after the travel ban AND for bookings checking in during March and April creates a short booking window. Many properties with 3+ bedrooms would typically experience a longer booking lead time. The number of bedrooms can have a significant impact on booking lead times, meaning that our change in ADRs may be slightly overstated. Additionally, some countries have slowly rolled out travel bans over time, so it is a bit challenging to select one date to measure from. We have summarized the dates we used for this analysis here:
Average Decrease in March and April in ADRs after Relevant Travel Restriction
Of course there are many other factors at play here, but the general trend of seeing a significant decrease in ADRs after travel bans are imposed does hold true. So what does this mean for STR hosts around the world? Lowering your nightly price is the best way to capture the demand that does exist in the short term. For more tips on how to capture demand and for the latest Coronavirus data trends we are seeing around the world check out our Coronavirus Support page on the Beyond Pricing website.