Slide 1: European Tourism and Coronavirus: 2020 Losses and Potential Recovery
TOURISM ECONOMICS - WTM WEBINAR EUROPEAN TOURISM AND CORONAVIRUS: 2020 LOSSES AND POTENTIAL RECOVERY David Goodger Managing Director, EMEA Tourism Economics dgoodger@oxfordeconomics.com April 2020
Slide 2: Global lockdowns are having a very large impact on economy and travel
Global lockdowns are having a very large impact on economy and travel Global lockdowns China Italy 16% Spain France Germany Past US (specific states) UK India Australia Japan Other 63% Present 0 20 40 60 80 100 Source : Oxford Economics/Haver Analytics % of global GDP Source: IATA Economics using Fl
Slide 3: Immediate economic impact will be greater than during GFC
Immediate economic impact will be greater than during GFC World: World:GDP GDP % quarter % quarter Forecast Forecast Non-China Non-China EMEMq/qq/q contribution (RHS) contribution (RHS) 4 4 China Chinaq/qq/q contribution (RHS) contribution (RHS) Advanced Advanced economies economies q/qq/q contribut
Slide 4: Travel is falling more sharply than GDP
Travel is falling more sharply than GDP Europe GDP & Tourist Arrivals GDP (real price) Annual growth, % 40% Prior upside 30% Prior downside 20% New baseline 10% 0% -10% -20% -30% -40% -50% 2001 2004 2007 2010 2013 2016 2019 2022 Source: Tourism Economics
Slide 5: Travel restrictions are dominant effect in near-term
Travel restrictions are dominant effect in near-term Coronavirus scenario assumptions: Europe • Assumed 8-month restriction period will Total expected impact duration #months including: Total 2020 reduce European travel by ~37% on top % 2020 Current Reduced travel fall* of other economic effects (eg
Slide 6: Policy stimulus is providing vital support for economic (& travel) recovery
Policy stimulus is providing vital support for economic (& travel) recovery Global: Fiscal impulse Ppts of potential GDP 2.5 Advanced Economies Emerging Markets World 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 Forecast -1.5 -2.0 2000 2005 2010 2015 2020 Source : Oxford Economics/Haver Analytics
Slide 7: Expected growth in recovery but impacts will be felt into the medium term
Expected growth in recovery but impacts will be felt into the medium term Global GDP Outlook Annual growth, % Global US Eurozone China 10% 8% 6% 4% 2022 GDP relative to 2% pre-recession trend 0% -2% -4% -6% 2019 2020 2021 2022 Source: Oxford Economics
Slide 8: No immediate return to prior levels of demand
No immediate return to prior levels of demand Europe Tourist Arrivals by Destination Region Europe tourist arrivals by destination region, relative to 2019 Annual growth, % 2020 2021 2022 2023 % difference from 2019 levels 2020 2021 2022 2023 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% -10% -10% -20% -20%
Slide 9: Long-haul travel is more volatile, but short-haul is important
Long-haul travel is more volatile, but short-haul is important Europe inbound arrivals growth 2020 by region Europe inbound arrivals growth 2020 by region % growth millions 0% 0 -10 -10% -8 -20 -30 -19 -20% -23 -40 -34 -30% -50 -47 -60 -50 -32% -40% -35% -39% -70 -40% -40% -41% -45% -80 -50% -50% -9
Slide 10: Short-haul recovery will be essential in early phases
Short-haul recovery will be essential in early phases Top15 Top 15country destinations,split city destinations, bydistance, splitby 2020 distance, 2020 Millions (mn) France Paris79%54% 21%46% London89%63% Spain 11% 37% Rome76%57% Turkey 24% 43% Barcelona Italy 74%60% 26% 40% Istanbul80%54% Germany 2
Slide 11: Long-haul is more important for major city destinations
Long-haul is more important for major city destinations Top 15 city destinations, split by distance, 2020 (mn) Paris 54% 46% London 63% 37% Rome 57% 43% Barcelona 60% 40% Istanbul 54% 46% Amsterdam 70% 30% Prague 72% 28% Lisbon 56% 44% Dublin 71% 29% Madrid 60% 40% Berlin 79% 21% Vienna 75% 25% Shor
Slide 12: Domestic travel remains very important for many markets
Domestic travel remains very important for many markets Domestic & international tourism spend for largest European destinations omestic &US$bn, international tourism 2019, domestic spendasfor % share largest European destinations labels S$ bn, 2019, domesticBelgium % share as labels 52% Poland Norw
Slide 13: Domestic travel recovery expected ahead of international
Domestic travel recovery expected ahead of international
Slide 14: Destination performance will rely on source market mix
Destination performance will rely on source market mix European city reliance on domestic and long-haul arrivals, 2019 100% Less volatile Sheffield Leipzig Domestic % share of total arrivals Bremen Cardiff Hamburg 80% Glasgow Gothenburg Essen Edinburgh Stockholm Oslo Lei
Slide 15: Oxford Economics global headquarters and offices
Global headquarters Offices in Offices in Offices Oxford Economics Ltd Europe, Middle East Americas Asia Pacific Abbey House and Africa 121 St Aldates New York Singapore Oxford, OX1 1HB Oxford Philadelphia Sydney UK London Mexico City Hong Kong Tel: +44 (0)1865 268900 Belfast Boston Tokyo Frankfurt
Slide 16: Impact of COVID-19 on Global Hotel Industry
Impact of COVID-19 on Global Hotel Industry Robin Rossmann – Managing Director International Source: 2020 STR, LLC / STR Global, Ltd. trading as "STR". © CoStar Realty Information, Inc. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR
Slide 17: Agenda
Agenda 1. Global impact of COVID-19 & China green shoots 2. Focus on Europe 3. Previous recovery cycles Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 18: 1. Global impact of COVID-19 and China green shoots
1. Global impact of COVID-19 and China green shoots Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 19: Rest of the world is about 2 months behind China
Rest of the world is about 2 months behind China Absolute Weekly Occupancy, Select Countries, Aligned by level of OCC China US Europe 70% Week End: US 3/7 China: 1/18 60% 50% Week end: Europe 2/29 40% 30% Week end: Week End: US 4/18 China: 4/18 20% 10% Week End: Week End: China 2/29 0% Week End: Eur
Slide 20: China recovers as US & Europe level-out at the bottom
China recovers as US & Europe level-out at the bottom Absolute R7 occupancy by day China United States Europe 70% 60% 50% 40% 35,2% 30% 23,7% 20% 10% 8,5% 0% 01-feb 08-feb 15-feb 22-feb 29-feb 07-mar 14-mar 21-mar 28-mar 04-apr 11-apr 18-apr Source: STR. 2020 © CoStar Realty Information, Inc. 5
Slide 21: Over 90% of hotels in China are open
Over 90% of hotels in China are open More than half were closed in February 100% 99,2% 97,2% 95,7% 92,6% 93,4% 84,5% Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Percentage of hotels participating with STR open at end of March vs. January 2020 Source: STR. 2020 © CoStar Realty Inform
Slide 22: Variations in recovery speed - Hangzhou leading the way to 50%
Variations in recovery speed - Hangzhou leading the way to 50% Mar 1st – Apr 11th 2020 Absolute Occupancy 50% 2020 Beijing 2020 Shanghai 2020 Hangzhou 0% Mar Apr Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 23: Still some way to go compared to 2019
Still some way to go compared to 2019 Mainland China, Mar 1st – Apr 11th 2020 vs 2019 Absolute Occupancy 2019 Beijing 2019 Shanghai 2019 Hangzhou 100% 2019 50% 2020 0% Mar Apr Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 24: Midscale and Economy have regained half the Occupancy from last year
Midscale and Economy have regained half the Occupancy from last year No weekday changes in 2020 2020 中档和经济型 Midscale & Economy 2019 中档和经济型 Midscale & Economy 100% 75% ~75% 2019 现在 50% 50% Now 25% 45天前 25% 45days ago 0% Mar Apr Mainland China, Mar1st – April 11th 2020 vs 2019 Absolute Occupancy Sourc
Slide 25: Luxury will take longer to reach similar levels
Luxury will take longer to reach similar levels 2020 奢华 Luxury 2019 奢华 Luxury 100% 75% ~65% 2019 50% 25% 现在 ~25% Now 45天前 ~5% 45days ago 0% Mar Apr Mainland China, Mar1st – April 11th 2020 vs 2019 Absolute Occupancy Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 26: China recovery lessons
China recovery lessons Might be applicable as we look forward to recovery across the rest of the world • Most closed hotels re-opened in 2 months – but some still closed • First phase demand drivers have been • domestic leisure • corporate business at industrial park area • quarantined guests stay a
Slide 27: Europe
Europe Photo by Anastasia Dulgier on Unsplash 12
Slide 28: January - Positive start to the year in Europe
January - Positive start to the year in Europe Europe – RevPAR % Change, Local Currency, January 2020 Stockholm -1 6 Helsinki Oslo -2 St. Petersburg 17 -1 -9 Copenhagen Edinburgh 12 Moscow Amsterdam -1 0 Berlin Dublin -4 3 Warsaw London 1 1 Kiev 4 -2 Prague Nursultan 31 Brussels 28 Budapest Zurich 0
Slide 29: February - COVID-19 impact can start to be felt across Europe
February - COVID-19 impact can start to be felt across Europe Europe – RevPAR % Change, Local Currency, February 2020 Stockholm -1 -3 Helsinki Oslo -2 St. Petersburg 6 -4 -8 Copenhagen Edinburgh 3 Moscow Amsterdam -6 -3 Berlin Dublin -3 -5 Warsaw London -2 -4 Kiev -6 -14 Prague Nursultan 13 Brussels
Slide 30: March - strong RevPAR declines due to the spread of COVID-19
March - strong RevPAR declines due to the spread of COVID-19 Europe – RevPAR % Change, Local Currency, March 2020 Stockholm -64 -55 Helsinki Oslo -57 St. Petersburg -44 -56 -72 Copenhagen Edinburgh -46 Moscow Amsterdam -72 -67 Berlin Dublin -64 -69 Warsaw London -60 -68 Kiev -70 -78 Prague Nursultan
Slide 31: Europe RevPAR decline is now significantly worse than 2008/9
Europe RevPAR decline is now significantly worse than 2008/9 Mainland China & Europe, RevPAR % change over prior year, Rolling 28 days Mainland China Europe 100% 80% 60% 40% 20% 0% -20% April 2009: -28.0% -40% -60% March 1 2020: -85.3% -80% August 2009: -59.1% -100% April 12 2020: -89.4% jan-07 jan-
Slide 32: Anticipated easing of social distancing is likely to be gradual
Anticipated easing of social distancing is likely to be gradual … and there is still a lot of uncertainty and lack of clarity about how it will be phased Country Minimum dates that restrictions will remain in place Easing of lock- Schools Construction, Retail Restaurants Gatherings > Borders down st
Slide 33: Recovery speed
What are the factors that can impact the forecast Let’s consider the three demand types of Leisure, Corporate Transient, and Corporate Group Demand type Quicker recovery scenarios Slower recovery scenarios Faster • Pent-up demand drives summer rebound • Virus persists/resurfaces in Autumn/2021 Leisu
Slide 34: V U W
V U W Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 35: Travel has proved its resilience to demand shocks before
Travel has proved its resilience to demand shocks before UNWTO statistics on international travel numbers Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 36: V… A SARS like 'short-term' decline and bounce-back seems unlikely
V… A SARS like ‘short-term’ decline and bounce-back seems unlikely China Hotel Occupancy March-November 2003 Beijing Hong Kong SAR Shanghai Guangdong Chengdu & Chongqing 100% 12 March 2003 6 months World Health Organisation 5 July 2003 issues a global alert on SARS World Health Organisation 80% anno
Slide 37: U… but will it be as/more severe than the Global Financial Crisis?
U… but will it be as/more severe than the Global Financial Crisis? Europe, Consistent Sample, RevPAR and GOPPAR Indexed to 2007, EUR, Constant Currency GOPPAR Index RevPAR Index 120 110 7 years 2 years 100 90 80 70 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: STR. 2020 © CoSta
Slide 38: So what's a W shaped recovery
So what’s a W shaped recovery An initial recovery, followed by stagnation/decline until virus cured/controlled then recovery Source: STR. 2020 © CoStar Realty Information, Inc.
Slide 39: Conclusions
Conclusions 1. China seems to be at the end of the beginning of its recovery – Occupancies near/heading towards half of what they would usually be – Driven by domestic demand of both leisure (first) then business – Time will tell if the recovery continues or flattens out 2. Europe’s recovery has not
Slide 40: Questions
Questions Source: 2020 STR, LLC / STR Global, Ltd. trading as "STR". © CoStar Realty Information, Inc. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR is strictly prohibited. Any such reproduction shall specifically credit STR as the
Slide 41: Current State of the Nordic Hotel Industry
Current State of the Nordic Hotel Industry Webinar 2020-04-29
Slide 42: Broad decline with slight differences between markets
Broad decline with slight differences between markets Occupancy and ADR YoY 1 Mar-26 Apr 2020 (local currencies)
Slide 43: Sudden and massive decline in demand
Sudden and massive decline in demand Occupancy, sold rooms, room revenue and closed rooms rolling 12 months indexed 2015-2020YTD (local currencies) Occupancy Sold Rooms Room Revenue Closed Rooms > 9-12% decline in all Nordic capitals on a rolling 12 months basis year on year since 1 March 2020
Slide 44: Temporary closings benefit those staying open
Temporary closings benefit those staying open Occupancy with fixed availability and occupancy with adjusted availability 7 days rolling YoY [Oslo] > Significant positive effect for hotels staying open from other hotels closing
Slide 45: Increased domestic travel may make up for lost export
Increased domestic travel may make up for lost export Foreign vs domestic spending on travel [Sweden] Swedish tourist Tourist spending spending in Sweden Decreased spending due to recession Swedish Spending still tourists’ made abroad Foreign tourists’ Lost international spending Can Nordic tourist
Slide 46: Occupancy On the Books indicate short-term effect so far
Occupancy On the Books indicate short-term effect so far Occ On the Books per month as of 1 Apr 2020, 1 Mar 2020, 1 Apr 2019 and actual occupancy last year Stockholm Copenhagen Compared to Apr LY Negative Pickup Mar Oslo Note: Helsinki market not covered with On the Books > Negative pickup short-ter
Slide 47: Current State of the Nordic Hotel Industry: Summary
Current State of the Nordic Hotel Industry Summary > So far – a severe demand problem - Ability and willingness to spend may yet be upheld - Cancellation patterns indicated by OTB data shows negative expectations only short-term so far, passive attitude medium-term > The million-dollar question: How