Chile hotels show resilience

Every country around the world has had to work through significant challenges since the start of the pandemic in 2020. For Chile, challenges were nothing new as protests that began in October 2019 were already affecting hotel performance around the country. The pandemic and those protests are still ongoing late into 2021, but Chile’s hotels are slowly but surely moving toward performance recovery.  

Recovering a bit differently
 

Most countries are recovering average daily rate (ADR) faster than occupancy. In Chile, the opposite has been true. The country saw a 47.6% occupancy level in September, which was 90% of the comparable 2019 level. At the same time, ADR came in at CLP60473.55, which was the highest level in the country since March 2020 but just 83% of the pre-pandemic comparison.

As shown in the chart below, Chile’s hotel occupancy index to 2019 has been mostly ahead of ADR since April 2021.

Class ups and downs
 

All hotel classes have been affected by the COVID-19 pandemic, however, Chile’s Luxury/Upper Upscale segment has been most affected. In September, Luxury/Upper Upscale hotels sat at just 33.8% occupancy or 62.2% of the 2019 comparable.

During the same month, however, the Upscale/Upper Midscale and Midscale/Economy combined classes surpassed 2019 levels in occupancy. Midscale/Economy hotels posted occupancy of 59.5%, or 119.9% of 2019 levels. Upscale/Upper Midscale hotels showed occupancy of 53.1% or 100.2% of 2019 levels.

Higher occupancies have translated to higher room rates for Midscale/Economy hotels, which posted ADR of CLP45202.00 in September. That was the highest rate for that combined segment since June 2020 (CLP48900.49) and 111.3% of the 2019 comparable.

Luxury/Upper Upscale ADR (CLP84723.55), for comparison, was just 83.1% of the 2019 comparable.

Staying home
 

As seen in most other countries, domestic demand has been essential in Chile’s recovery with leisure destinations still dominating as tourists continue to choose regional gateways instead of big cities. For example, among STR-defined market, Chile Provincial’s occupancy came in at 59.1% in September or 122.6% of the 2019 comparable. Thanks to domestic demand, Chile Provincial has been above 2019 levels in occupancy since May 2021.  

Similar to what we showed earlier in this analysis, Chile Provincial has shown slower levels of ADR recovery. In September, the market’s ADR was CLP66714.64, or 104.5% of 2019 levels. That was the first month the market surpassed its 2019 levels since March 2020 (106.0%).

Santiago is further behind the pace. In September, hotel occupancy reached 75.2% of the 2019 comparable, which was the market's highest level since March 2020, as corporate demand continues to suffer from border closures and restrictions as well as lack of a MICE segment or international demand. In terms of ADR, Santiago reached CLP55909.02, or just 72.6% of 2019 levels.

An uncertain yet brighter future
 

Chile has spearheaded one of the world's fastest and most successful vaccination drives with more than 89% of the population fully vaccinated as of 20 October, according to Chile’s Ministry of Health. Additionally, Chilean authorities announced on 27 September the end of the state of emergency established at the start of the pandemic. International restrictions have started to ease as well, and on 15 September, Chile reopened its borders to visitors ahead of summer tourism season.

Although the industry is still in the early stages of recovery, countries like Chile are proving that the road to recovery is being driven. Plenty of uncertainty remains around global travel, but the future looks to be brighter for Chile.

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