Recently, the U.S. State Department issued a “Level 4” travel advisory for all international travel. As of April 5, seven of the 48 contiguous states, including Maine, Vermont, Massachusetts, Rhode Island, Delaware, and Nevada, plus Alaska and Hawaii, require almost all incoming travelers to self-quarantine for 14 days. Nobody travels.
Hotels recorded the unprecedented-low performance
The travel and hospitality industry got hit the hardest, with massy layoffs and record-low KPIs. According to STR’s lodging report for the week ended on March 28, the industry’s KPIs hit “unprecedented low.” For the week of March 22 to March 28, the industry recorded:
- Occupancy: 22.6%, a minus 67.5 percent change from the same period of last year (March 24 to March 30, 2019)
- ADR: $79.92, a minus 39.4 percent change
- RevPAR: $18.05, a minus 80.3 percent change
- The industry is expected to see the worst occupancy in 2020 on record
- Occupancy: 19.6%, a minus 74.6 percent change
- ADR: $89.71, a minus 43.9 percent change
- RevPAR: $17.60, a minus 85.7 percent change.
Airbnb too is not doing well
Airbnb just lowered its internal valuation to $26 billion in April, down from $31 billion in the company’s previous valuation. According to AirDNA.com, a tech firm that collects and provides short-term residential rental data,
- The global Airbnb supply remained relatively little change.
- The weekly Airbnb revenue for New York City dropped from $12.5 million in the week of January 5 to $6 million in the week of March 15, a minus 52 percent change.
- The weekly revenue for San Francisco dropped from $4.4 million in the week of January 5 to $1.8 million in the week of March 15, a minus 59 percent change.
Comparing to the AirDNA.com data for Beijing, a place with a sticker lockdown order earlier, bookings dropped from 40,508 in the week of January 5 to 1,655 in the week of March 1. That was a minus 96 percent change.
Looking at the yearly trend (March 2020 vs. March 2019), another AirDNA.com report reveals some new trends:
- Rural areas reported the most significant yearly gains in the month at $1320 million, a $280 increase from the previous year
- Suburban areas saw growth from $294 million to $345 million
- On the contrary, the revenue in urban markets dropped from $706 million to $631 million
It is important to note that such a yearly trend was released on March 23, 2020. It is likely that the coronavirus outbreak has stronger negative impacts on urban markets, in which more confirmed infected cases were reported in large metropolitan areas. It is also plausible that people might choose to stay outside of the urban areas before the stay-at-home order takes effect.
When the pandemic is over, will Airbnb guests want to stay in chain hotels instead?
It will probably take a long time before the industry bounce back to the 2019 peak even after the pandemic is over. When people start traveling again, however, will chain hotels win some Airbnb guests back?
Referring to the pros and cons of staying in a hotel vs. an Airbnb facility, hotels appear to be a winner. For example,
Let’s hope the pandemic will end soon. Then, everything will go back to normal.
When people begin traveling again, will chain hotels become a more attractive option for the travelers who usually stay at Airbnb?