“It is impossible to know how many of these closed hotels and inns will reopen.”
By Nick Corbishley for WOLF STREET:
“After hitting rock bottom, we finally seem to be turning the corner. At this rate, at the end of May, we might even hit the breakeven point for the month, for the first time since March of last year, ”says Pol. He and his two partners own Hostal Live Barcelona, a small two-story hostel in central Barcelona that was closed for 12 months, from March 2020 to February 2021.
“We don’t know when, if ever, we’ll be able to rent the rooms at the kind of prices we were charging in 2018. But for now, at least the worst seems to be behind us – barring another cataclysm. “, did he declare. .
It was touch and go for a while. The only reason Hostal Live is still in business is because Pol and his two partners had capital to lean on when the virus crisis hit. This capital was supposed to be used to develop the business. Instead, much of it was used to keep the business alive:
“As our bank manager said in March, the only reason we qualified for an emergency loan was because we had no debt on our books and we had savings to support us, that we had planned to spend to buy another hostel, ”he said. . “We may still have that opportunity at some point later. At the moment, we are counting our blessings; many of our competitors haven’t come that far. “
Pol and his partners also owe a debt of gratitude to the Spanish government’s leave program, which has paid 70% of their workers’ wages and most of their social security costs for 14 consecutive months. The workers are still on leave, although Pol and his partners are now covering the limited hours they have been working since the hostel reopened.
Another lifeline was provided by the landlord, who in the fall agreed to a 50% rent reduction for six months. At the end of that period, he agreed to extend the conditions for another six months.
Hostal Live finally reopened, albeit on only one of its two floors, in early March. At that time, the Spanish economy was still partially blocked, non-essential travel between regions was prohibited, and a 10 a.m. curfew was still in effect. And there were hardly any tourists at all in Barcelona.
“The timing may seem strange,” says Pol. “But we wanted to make some big changes to the hostel before properly reopening it to foreign visitors. Most importantly, we wanted to install and test a contactless key system so that our customers could access the reception, their rooms and other areas of the hotel with their phones. This would help minimize contact between customers and staff for as long as this pandemic lasts. “
But to fill its rooms at a time of almost zero tourism, Hostal Live had to offer historically low prices. In March, that meant charging an average price of € 30 per room per night, which is less than half the average price for a normal month in March. But the plan worked: people were coming to fill the rooms, but not as far as usual.
“With the exception of a few French tourists, almost all of the guests were Spanish. During the week we welcomed workers who came to Barcelona for the day and suddenly found themselves in need of a bed for the night. On weekends we tended to attract young couples, often from the suburbs of Barcelona, who had fun rather than business in mind. By the end of the month, we had reached an occupancy rate of 15%. “
It may sound pitifully low but it was better than nothing, especially since most of the hotels in Spain weren’t even open. In the first quarter of this year, more than 70% of the entire hotel park in the country remained closed, according to a report by STR and Cushman & Wakefield. Average revenue per available room (RevPAR), a measure widely used in the hospitality industry to measure the operational performance of an accommodation unit such as a hotel or motel, decreased 65% from the same period of 2020.
Share of tourism in GDP in Spain collapsed by more than half last year, to 5.5% against 12.4% in 2019, according to a study. This was after international tourist arrivals by air, land and sea collapsed 77% from the previous year, to just 19 million foreign tourists. This trend continued throughout the spring of 2021. In March, according to the latest data available, the number of foreign tourist arrivals was still only 490,000, the lowest level in March since at least 1995 This was the 13th consecutive monthly decline in tourist arrivals. .
“It’s impossible to know how many of these closed hotels and inns will reopen,” Pol said. “Many homeowners did not have such a large financial buffer when the crisis hit. The number of hotels for sale started to increase sharply last summer before leveling off at the start of this year. “
In April of this year, Hostal Live Barcelona opened its other floor to customers. By the end of the month, the occupancy rate had tripled to 44%. French and Italian tourists began to arrive in spurts. During the Easter holidays, all the rooms in the inn were occupied. So far in May, the occupancy rate is 60%. And there is still a week left.
This may be a far cry from the pre-pandemic reality, where the average monthly occupancy rate was 93%, but the trend is improving. Foreign tourists, mainly from France but also from Italy, Germany, Austria and the Czech Republic, now represent around half of all visitors. And Pol and his partners have been able to gradually increase prices, although they are still only a fraction of what they normally would be.
The European tourism industry is finally open for business. EU countries officially agreed last week to welcome foreign travelers who have received one of the coronavirus vaccines approved by European regulators, of which there are currently four: Pfizer-BioNTech, Moderna, AstraZeneca and Johnson & Johnson. Vaccinated people will be allowed to enter the block, if they have received the last recommended dose at least 14 days before their arrival in the EU.
The UK government’s decision to leave Spain – and a host of other EU countries, including France, Italy and Greece – from its coronavirus ‘green list’ has raised concerns. The move means British travelers returning from Spain must continue to provide a negative test on arrival, be quarantined for 10 days and take two Covid-19 tests at home. The UK government’s advice not to travel for tourism or leisure to countries on its Orange List, such as Spain, could also invalidate travel insurance.
This could deter many British tourists – a key segment of the market – from traveling to Spain. In 2019, Spain welcomed over 18 million tourists from the UK, just under a quarter of the total.
Business travel is also in the doldrums. The Mobile World Congress, the world’s largest mobile trade fair, was held in Barcelona every year. Last year it was canceled. This year it should take place at the end of June, but he lost so many key exhibitors in recent weeks, including Samsung, Lenovo, Ericsson, Sony, Google, IBM, Nokia, Qualcomm and Oracle, that it is now double the “zombie show”. But the event’s organizer, GMSA, insists the show must continue even as more and more attendees pull out.
The fair – which normally has 110,000 attendees – is of vital importance to Barcelona’s tourism industry. Before the virus crisis, it generated around half a billion euros each year, much of which ended up in the pockets of hoteliers.
“Even if this takes place with only a fraction of the normal number of participants, it could give the city and its businesses a chance to start getting back on their feet,” Pol says. By Nick Corbishley, for WOLF STREET.
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