Hotel segmentation mix and traveller origin can seriously impact the industry’s performance. In the Middle East, for example, reliance on business and international travel has left countries with only domestic leisure demand. Between 3–31 July 2020, occupancy rates fell in three out of five GCC countries, while Saudi Arabia and Bahrain maintained level occupancy during that same period. The Middle East has enjoyed a hospitality renaissance in the past few years, attracting large-scale events such as Expo Dubai 2020 (postponed to 2021) and the 2022 Fifa World Cup in Qatar. Consequently, high-supply growth stifled occupancy levels prior to the outbreak of Covid- 19. While some countries – namely Saudi Arabia – have looked to expand their tourism industry and attract more leisure demand, the region still relies on long-haul travellers, which are in short supply.

Congruent with their popularity as business and long-haul leisure destinations, luxury and upperupscale properties are well represented across all five GCC countries. More than 40% of hotel supply in Kuwait, Qatar and Saudi Arabia falls into that tier. As the collapsed class of choice for group and corporate travel, luxury and upper-upscale hotels have been disproportionately impacted by the Covid-19 pandemic.

Gradual recovery

Conversely, countries with stronger domestic leisure demand – think ‘staycations’ – had better luck in raising occupancy rates over the course of July 2020. Shifting the focus to Europe, hotels in Switzerland, France, Germany, Greece and the Netherlands steadily increased occupancy each week in July, ending the month 10% above their respective starting points. While group business is important in these markets, they have historically relied on leisure demand – combined, their weekend occupancy rates exceeded weekday occupancy by 2% in July 2019 – and their centralised locations allow for short and medium-haul travel.

Demand drivers are hugely important in both understanding and beginning the recovery process, but they are only part of the equation: sick people can’t travel and travellers don’t want to get sick. Covid-19 caseloads can cause plateaus, recovery and even setbacks in hotel performance.

Travel has slowly resumed as many countries worldwide phase out or end lockdowns, however, in some countries, loosened restrictions have led to increases in Covid-19 cases. For India, Japan, South Africa, Spain and the US, rising Covid-19 cases appear to have stalled recovery. All five countries experienced week to week growth in the number of new cases for the five weeks preceding 1 September 2020, and weekly occupancy rates remained flat during that time.

India has emerged as one of the worst affected nations and the impact on hotel performance is obvious. Occupancy was down 2.1% from the week ending 4 July 2020 to the week ending 1 August 2020. Over the same period, new weekly Covid-19 cases increased from 139,000 to 360,000.

Under control

The good news is that if rising caseloads appear to offset recovery, controlling the virus has the opposite effect. Countries such as South Korea, Italy, Canada and China have fought hard over the past few months to control the spread of Covid-19 using a variety of different measures. The work has paid off in these areas and hotel occupancy has slowly but steadily improved. Occupancy rates in South Korea increased by 14.8% between the beginning and end of July 2020. Italy and Canada, meanwhile, posted moderate 9% gains over the same period.

China, several months ahead of the rest of the world in terms of its recovery, saw hotel occupancy rates grow from 45.5% in the week ending 4 July 2020 to 61.9% in the week ending 1 August 2020. This 16.4% gain is especially notable as China experienced a minor setback in recovery in June, due to a spike in cases in Beijing. The country’s quick response to the spike allowed for a swift recovery of its hospitality industry.

No two countries are recovering exactly alike, but broad trends can be found in terms of geography and virus-related restrictions. Destinations able to attract domestic leisure tourists, or in areas with wellcontrolled Covid-19 caseloads, will continue to lead the global recovery.