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Germany, Austria, Switzerland: resilient markets

Adapting to shifts and fluctuations in demand has always been a key advantage in moving hotel performance forward. Following a pattern similar to markets in other parts of the world—like China—the DACH region (Germany, Austria and Switzerland) has managed to recover its occupancy at a faster pace than most markets in Europe.

In March, and particularly April because of government regulations, performance in the region dipped to an all-time low amid the COVID-19 pandemic. Hotels were not forced to close completely, however, and remained open for business travel as leisure tourism stalled. Germany’s occupancy fell to just 8.2%, while Switzerland and Austria dropped to 8.9% and 4.6%, respectively.

Weekly Occupancy recovery

Some of the region’s markets, largely reliant on group travel, were further affected. Markets such as Lucerne or Zermatt showed insufficient data to report on due to closures, while Graz saw a maximum occupancy of just 2.8% by the end of April. Showing slightly better levels, Germany’s regional markets surpassed the country’s main cities as Stuttgart and Dortmund recorded 5.0% and 3.8% levels in occupancy, respectively. Bonn came in at 11% and Aachen at 12.9%. Likewise, airport markets were amongst the top performers in terms of occupancy, with Munich Airport reaching 11.2% and Frankfurt Airport at 9.9%.

With the easing of restrictions in May, and with travel picking up, the region showed signs of recovery. This led to double-digit occupancy figures in leisure markets like Berner Oberland Regional (32.6%) and Switzerland Central Regional (29.3%).

In Switzerland specifically, leisure travel seems to have boosted the country’s performance. From mid-June on, along with the summer holidays and school holidays that started in July, demand rose noticeably, particularly for leisure destination like the Valais (52% occupancy) and Switzerland Central (49%). Domestic travel has become a trend in Swiss tourism, with travelers looking for hidden gems within the borders. Consequently, there were visible gaps between some markets—the best performing market was the Bern (36%) versus Geneva (18%) or Zurich (21%). Bern, the capital city, attracted more domestic travellers while Geneva and Zurich do depend on a more international demand.

Catching up more timidly, Austria’s average occupancy, which had been brought down by regional-market performances, bounced back in June, reporting an increase in occupancy from 17.4% to 32.7% in July. Graz and Salzburg have been driving this increase, even surpassing the 50% occupancy mark in August. This is due to domestic travel linked to the uncertainty surrounding the ever-changing travel landscape across the continent.

Germany, supported by a strong economic scene, picked up on business travel by organizing some conferences/events on a hybrid and virtual basis. This was illustrated by midweek occupancy from August to September, with markets like Berlin reaching 46.7% on a Tuesday (25 August)—not too far off from the following Saturday (29 August) at 48.9%.

Midweek and weekends occupancies

Average daily rate (ADR) in Germany and Switzerland have remained at a consistent level throughout the year. Germany for example, went from EUR95.40 in January to EUR82.44 in May and EUR86.37 in August. On the contrary, Austria’s ADR showed a significant plunge in May (EUR78.54), showing a severe impact from no tourism in the country. However, Austria’s ADR has slowly increased, reaching EUR104.57 in August.

Vast demand gap but relatively stable prices

Even with travel slowing circa late August/beginning of September, markets like the North of Germany have shown resilience with positive pickup in occupancy (Aachen: 62.1%, Hamburg: 52.7%, Rostock: 82.7%). It is sufficient to say that the business sector and domestic travel have kept the region’s performances from being damaged as much as expected. But in the long haul, will it follow the same path to recovery?

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