ITB Berlin 2010Berlin, Germany — 10-14 March 2010
STR: Amsterdam hostels find green shoots
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Kelsey Fenerty, STR
With many European hostels temporarily closed due to the COVID-19 pandemic, good news for the hostel industry is in short supply. In Amsterdam, however, the tiniest of green shoots may have started to emerge for the beleaguered sector.
Occupancy improves across accommodation types
Accommodations occupancy remained dismally low in May, with hostels filling 14.3% of beds and hotels selling 8.1% of rooms. These numbers, however, exhibit minor improvement over April occupancy when hostel occupancy barely cleared 13% and hotels sold 7% of rooms. Breaking out Midscale and Economy hotels – hostels’ closest competitor in terms of Average Daily Rate – yields similar results. Budget accommodation occupancy outpaced all hotel occupancy and rose from 10.1% in April to 11.6% in May.
The minor differences in April and May occupancy numbers may not appear significant, but they are indicative of improving performance. Hostel and hotel occupancy have trended similarly over the past five months; looking ahead into weekly hotel data for June, the slow occupancy climb continues. Amsterdam hotels ended the week of June 27 at over 16% occupancy, the highest weekly occupancy since the week ending March 14.
Affordable accommodation rate less bad
With occupancy weakened, it’s no surprise that Average Daily Rate (ADR) has suffered as well. During downturns, some operators may cut rates to induce demand, but these rate drops may not have had the intended effect.
The most affordable accommodation types fared best when it came to holding rates in May. Midscale and Economy class hotel ADR declined roughly 44% from 2019, while hotel rates declined 51.4% from last May.
There could be a few different reasons for budget accommodations’ relative success. Affordable accommodations are in higher demand: Hostel and Midscale and Economy hotel occupancy exceeded all hotel occupancy in April and May, which may offer more pricing power to operators in those segments.
With travel difficult or even banned, dropping rates is unlikely to have any impact on demand, leading to decreased Bed Revenue on top of diminished demand. In many cases, hostel and hotel guests are no longer the traditional traveler but instead a local resident or key worker in need of accommodation.
Hostel RevPAB decline trails hotel RevPAR decline
While the hostel sector is holding its own in comparison to the hotel sector, its pandemic performance does appear to lag hotel performance by about one month. Despite the small creep in May occupancy compared to April, hostel Revenue per Available Bed (RevPAB) in May was €3.07, down €0.86 from April RevPAB.
Hotels, on the other hand, experienced a mild Revenue per Available Room (RevPAR) lift compared to April 2020. While seasonality could be the culprit – May marks the true beginning of the high summer season – more than likely the modest RevPAR increase in May can be attributed to hotels’ significantly poorer April performance.
While hostel ADR steadily devolved over the past three months, hotel rates plummeted in April and regained a miniscule amount of ground in May. Hostels did not experience such an extreme ADR decline and consequently increased occupancy and decreased ADR compared to April.
Hostel (and hotel) performance over the past few months has been significantly different than performance during any other period in STR’s history. While we are a long way from true recovery, May results indicate that the very smallest green shoots may be sprouting in Amsterdam, and preliminary hotel results give hope that June will be an even better month for hostels.
Interested in More?
STR has created a dedicated landing page for all hotel performance analysis around COVID-19.
For more information regarding the hostel industry, please contact Patrick Mayock at firstname.lastname@example.org.
STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, and an international headquarters in London, England. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.
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