In the summer of 2020 there is a very volatile booking situation. Due to COVID-19, strategic planning has become much more complex, therefore fact-based decisions are more important now than ever before. The increasing digitalization causes the amount of available data to increase rapidly in the tourism industry. Evaluating the historical booking data is becoming more and more important for companies. In order to create a solid booking history and thus being able to generate a meaningful forecast based on time series analyses, it is necessary to structure, order and evaluate the obtained information. This is where our Head of Data Science, Dr. Martin Schwarz, comes into play. He is responsible for the development of the booking models at RateBoard.
Dr. Martin Schwarz describes himself as a statistician and discovered his fondness for mathematics and systematic “pattern recognition” at a young age. With his master’s degree and doctorate in technical mathematics, he was able to establish his passion as the basis for his professional career. In his final thesis, he investigated the vibrations of composite materials and their stochastic properties, which enables them to determine any damage to the material by precise mathematical calculations. For his work Martin Schwarz was awarded the prize for applied research by the Austrian Chamber of Commerce. At the same time he crowned his time at university with a research stay at the RICE University in Houston, Texas.
His path to RateBoard
After completing his doctorate, Martin became aware of the position as data scientist at RateBoard due to the constant interconnectivity between the university and RateBoard. His passion for recognizing data patterns and creating predictions aligned perfectly with the tasks at RateBoard. He himself describes his work at RateBoard as “great”. According to his own statement, this is due to the ambitious team, the exciting activity fields, the training opportunities at the university and the constant cooperation between RateBoard and renowned scientists. The increasing relevance of data analysis is also reflected in the growing number of bootcamps, which our Head of Data Science regularly attends to deepen and exchange his knowledge with colleagues.
These perks, combined with RateBoard’s future-orientated approach enables Martin Schwarz to live out his passion in mathematics and to visualize the elegance of the subject matter for RateBoard’s customers. At the same time, customers receive added value in the form of analyses that support hoteliers in strategic planning and dynamic pricing.
Especially due to the current situation in the Corona summer, the creation and evaluation of anonymized statistics of various markets plays an essential role. In this phase, preparing and visualizing the large amount of data allows a quick overview of the current booking trends and changes in the market situation.
The latest booking trends
The tourism industry is statistically beginning to regenerate, with some regions in the leisure sector even experiencing an upswing compared to the previous year. In the holiday hotel industry, a relatively rapid recovery is taking place, with the summer months being the driving force behind the return to the previous year's figures. From July onwards, our statistics show an average deviation in occupancy rates of 15-20% in the holiday hotel industry, while in the city hotel industry there is a percentage decline of more than 40%. In the cities, these figures continue until October, as business travellers in particular have been eliminated and all major events for this year have been cancelled. In contrast, the leisure segment, is showing similar figures since August for on-the-books bookings compared to the previous year.
Immediately after the hotels reopened, an immense price war happened throughout the market. The Average Daily Rate recovered for the most part over the course of June, with only a decline of €10-15. Since mid-July, the holiday hotel industry has achieved average rates similar to those of the previous year. Despite the lower occupancy rate in the city hotel industry, since mid-July it has been possible to achieve similar room rates compared to 2019. This is a very positive development, as an intensified price war can cause long-term damage to pricing. For this reason, price dumping should also be avoided in the future. IMPORTANT to note is, that the statistics are a snapshot of On the Books bookings and are not a forecast. Therefore, as the date of arrival approaches, depending on market demand, the current figures may change both positively and negatively.
The German market
The German hotel industry is already profiting from the media campaigns and the call for holidays in Germany. The initially strong booking deficit in the holiday hotel industry already levelled off in July, and from August onwards, similar percentage figures for on-the-book bookings can be seen as in the previous year. The further development of the booking situation will depend on future market demand and willingness to travel in combination with the developments around COVID-19. In the German city hotel industry, this gap (deficit of around 40%) is unlikely to close due to the absence of business travel, travel groups, overseas bookings and the cancellation of major events such as the Oktoberfest in Munich.
Combined with the average room rate, Germany is currently the fastest regenerating market in the DACH region. In June, the average daily rate in the holiday and city hotel industry was already similar to that of the previous year, with a slight deficit. From July onwards, the median price of the rooms sold to date in both segments are higher than those of the previous year at the same time.
The Austrian market
Austria also advertised holidays in "red-white-red" and managed to actively promote domestic tourism. According to Statistics Austria, a 59% decline in occupancy rates was recorded in June compared to 2019 on the whole market. In July, the holiday hotel industry is approaching the previous year's figures of 70-80% occupancy, and from August onwards a slight percentage increase in bookings already made can be seen. Essential for this development is the opening of the border to Germany, Austria's largest source market and this year's trend towards domestic travel. Just like in Germany, no real improvement in the booking situation in the city hotel sector is in sight in the short and medium term. According to STR, Vienna, Linz and Salzburg are the most affected cities in Austria.
The room rate was also raised again quickly, and a marginal increase in the average daily rate in the holiday hotel industry is evident. In the city hotel industry there is a stronger price war due to low occupancy rates, with the room rate averaging € 30-40 below the previous year's figures. These figures represent a snapshot and will change with future market developments. Lakeside regions in particular are benefiting from travel restrictions this summer, as many people are going on a lakeside holiday as an alternative to a beach holiday.
The South Tyrolean market
South Tyrol has also initiated a media campaign entitled "Restart Südtirol". This measure has had a positive effect on the statistical development, but the speed of rehabilitation is currently slower than in Austria and Germany. On average, the figures in July are 20% lower than in the previous year. From the beginning to the end of August, the current occupancy rate of bookings already made is usually only 10% lower than in 2019.
The Average Daily Rate in the Leisure Sector was raised again sharply after the lockdown until mid-July, since then an average deficit of €10-15 has been recorded for On the Books bookings. Italy itself was strongly affected by the COVID-19 outbreak, which is also a main reason for the slower regeneration of tourism.
The summary of our head of data science
In general, the current booking situation shows a positive development for the tourism sector. Germany in particular has already managed to establish domestic tourism among the population, which is of great importance, especially in 2020. The holiday hotel industry has been able to recover quickly, especially in Germany and Austria, and various regions are even benefiting statistically compared to 2019. In the cities there is still a strong deficit and can expect a longer regeneration phase. It should be noted that the figures and statistics given are a snapshot of the current situation and do not represent a forecast. The trends on the various markets will depend on the general willingness to travel and the developments around COVID-19.