Has Argentina’s recovery started?
While many nations have lifted COVID-19-related entry restrictions for travelers and provided an additional flow of demand for reopened hotels, Argentina’s government extended its mandatory lockdown to 11 October 2020. How has this affected Argentina’s’ recovery?
Latin America following a different pace
For the week ending September 12, Peru registered Latin America’s highest occupancy level (38.9%), followed closely by Chile (29.2%), Mexico (27%) and Brazil (24.4%). Hotels in Colombia, Argentina and Costa Rica registered the lowest occupancy levels in the region with only 17%, 15.9% and 13.8% of rooms occupied, respectively.
Chile was one of the most affected countries with up to 80% of the rooms closed. On average, most countries reported between 50% and 60% of rooms closed.
The weekly data ending with 26 September, which represents only the hotels open in the region, show that Peru and Chile registered much higher occupancy than the rest of the region due to demand from government initiatives.
Colombia, Argentina and Costa Rica showed some of the lowest occupancy rates (below the 10% mark) observed in South America due to much longer lockdowns periods. In September, there was a slight pickup in occupancy as restrictions eased—that trend is expected to continue through October’s data.
A deep dive into Argentina
As we’ve seen in other markets around the globe, regional destinations in Argentina are leading the recovery, while Buenos Aires has lagged. In August, regional destinations posted a 21.7% occupancy level, while, for comparison, Buenos Aires was at 17.9%.
Buenos Aires’ performance has been shadowed by the lack of corporate business as well as meetings, incentives, conferencing and exhibitions (MICE) demand. Domestic demand boosted hotel performance in the regional market.
Hotel class impact
All hotel classes in Argentina have been impacted by the COVID-19 pandemic, however, the Luxury/Upper Upscale segment has been the most affected.
Since May, Luxury/Upper Upscale hotels sat at just 2.3% occupancy on average. On 6 May, Luxury/Upper Upscale hotels posted their highest occupancy level (just 6.5%). For comparison, Midscale and Economy hotels posted their highest occupancy level of 59.6% on 30 June.
How will each segment behave into the future? As we’ve seen all around the globe, leisure travel is likely to recover faster in Argentina and other Latin America markets. Although, according to 2019 data, South America’s group segment already had fallen 3%. Markets depending on corporate and MICE business, like Buenos Aires, will recover in a slower pace due to its reliance on international travelers and their longer lockdowns.