Welcome to another Expert Insights discussion.
Today we are joined by our regular guests from berner+becker, one of our Expert Partners:
🔹 Veit Meier – Director of Operations
🔹 Till Benthien – Senior Revenue Manager and Head of Employee Development
In this discussion we consider what is the current situation and what are the challenges for hotels in Germany.
We cover many topics including the difference between city hotel and coastal destinations, will domestic demand be enough, new supply will increase competition, impact of reduced regional and international travel and the importance of pricing and product.
Hope you enjoy it 🤞👍
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Till highlights the current situation is not looking very bright at the moment.
“You’re only allowed to travel for business reasons or any other reasons, for example, medical treatment, etc. So there are lots of hotels close due to just the lack of demand. I just had a brief look at the figures from February and overall, just to name three city markets, Hamburg is down by 90.3% in terms of RevPAR, Munich is down 89.3%, that’s on the better end of the numbers and Berlin is down 90.7%. So you see there is not really that much demand left. All of the three markets are basically single digit RevPAR figures. So we’re talking about RevPAR below €10 (Euro)”
Booking hesitation is are also still evident
“But on the other hand, especially for the hotels that we see in the leisure destinations, let’s say coastal regions but also moving further to the Alps, you see that there is quite some interest from guests to travel in the summer. You’ll see some pickup and we see lots of website traffic, but, and that is the big but, it’s not clear when people are allowed to travel again, because there’s no clear perspective, no clear date set yet. So we are seeing people are hesitant on committing to a booking, they are rather shopping around and looking at the best offers and try to build up like a wish list where they want to travel.”
Veit raises the point that buying power will also have an impact
“A lot of people have lost their jobs, not only from within the industry, but also from other industries that have been impacted by this whole pandemic as well. There’s obviously money missing and, you know, just think about the family, two kids, you will want to go away for five days to the coastal area. What we hope will happen is we see average rates for hotels going up because they see the pent up demand coming in, and they can, capitalise on it. But what does this actually mean for the families wanting to travel, with maybe less money in the pocket. The last thing you’re thinking of is to spend €1000 (Euros) on a five day getaway.”
“So that that will be one interesting factor, which we cannot judge on at the moment. But it’s certainly something to consider out there. It will be interesting to see what that also does to additional spends within the locations if people are travelling, it will be interesting to see how average rates for hotel rooms are going to develop. I think in the very short term, you’re going to see a very nice rise, but in the mid term and the long term, depending on how the labour situation pans out and how safe and financially secure families are feeling, it might also be that you have a bigger competition on price”.
🎞 VIDEO CHAPTERS
- Welcome (1:13)
- Current Situation in Germany (4:03)
- Coastal vs City Destinations (9:02)
- Will Domestic Demand be Enough (16:30)
- New Supply Will Increase Competition (24:04)
- Impact of Reduced Regional & International Travel (28:50)
- Psychological Approach to Travelling (31:34)
- Importance of Pricing and Product (38:33)
- What Advice for Hoteliers (43:02)
- Wrap Up (49:55)
- Additional Videos and Subscription (51:53)
👀 WATCH NEXT (A few of our other videos)
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https://youtu.be/CWKACDJ-izs
💢 Why Understanding Hotel Breakeven Helps Revenue Strategies
https://youtu.be/ZmZmR9TpYVM
💢 Price Fairness and Price Identity: What Is It and Why Is Is Important?
https://youtu.be/c-jUKwiczg8
💢 Customer Lifetime Value: How Does Price Fairness and Price Identity Fit In?
https://youtu.be/6LlmMRW0umU
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