Hotels Increase Revenues and Prices Spurred by Record Occupancy

24 August 2017

Spain registered a historic high of 44 million overnight hotel stays and a record occupancy of 73% in July. The data show increases in hotel rates of 7% and average daily revenues per room of 8%.

The recent successive tourism records are translating into historic highs in overnight stays and occupancy, and underline the hotel sector’s ebullience. In July 43.6 million overnight stays were registered in hotels, 1.6% more than in July 2016. Overnight stays between January and July increased by 3.8% and exceeded 190.6 million overnight stays, according to the latest report by Hotel Statistics, prepared by the National Institute of Statistics (INE).

11.8 million Spanish and foreign travellers stayed in hotels in July. The record figure lends credence to previous forecasts that 2017 will be a new record setting year, with more than 83 million arrivals. At the same time, hotel occupancy rates stood at 73.1% (an increase of 0.7%). In the case of weekends, occupancy rates rose to 77.3%, an increase of 2.2%.

Areas that are traditionally the focus of tourism are at the centre of data on hotel occupancy. The Balearic Islands reached a rate of 90.7% in July, accounting for 34% of total overnight stays in Spain, followed by the Canary Islands (83.6%) and Catalonia (77.7%). Barcelona continues as the most favoured city with an 83.9% occupancy rate. Looking at total overnight stays, the most crowded area has been Mallorca, with 8 million overnight stays and an occupancy rate of 92%. As for average stays, Pájara, a municipality located in Fuerteventura, registered an average stay of 8.42 days.

These figures are great news for the hotel sector, which continues to increase revenues and raise prices per room. Thus, the Hotel Price Index (IPH) increased by 6.9% in July. The Balearic Islands, Catalonia, the Canary Islands and Andalusia accounted for 76.9% of the HPI.

The rate hotels charge on average for each room stood at 98.5 euros. This is an increase of 6.1% compared to July 2016. Likewise, the average daily income per available room (RevPAR) rose 7.9% in July, to 74.8 euros. In the Balearic Islands, the same figure amounted to 105.8 euros (4% more), while in Catalonia it soared 16%, to 86.8 euros.

The Circle Widens

Although the countries in the European Union continue to lead overnight stays, accounting for 80.3% of the total number of foreign visitors, tourism from countries further afield is growing at a faster pace. In fact, while visitors from countries like France, the United Kingdom and Belgium fell by 7%, 5% and 4%, respectively; overnight stays of tourists from Russia and Japan soared by 24% and 20%. In the case of the United States, the increase was 16% in July. Germany would be the exception that confirms the rule. The increase of overnight stays of German tourists amounted to 9%.

Although the number of overnight stays continues to increase, the sector faces several challenges that will permit hotel revenues and prices to continue to increase. The first involves the democratization of transport, where people will be able to travel more for less money, but over shorter periods of time.

Specifically, the Spanish government, through the Secretary of State for Tourism, announced a strategic plan focusing on quality tourism, whose economic impact is coupled with the record arrivals. So far, Spain ranks second in the world in terms of revenues from tourism, with €54 billion, according to the latest ranking of the World Tourism Organization, only behind the United States, which is favoured by visitors from more countries around the world, who have more purchasing power and stay for longer periods.

The second challenge is related to the disruptive entry of new players into the field of tourist accommodations. Vacation rental platforms have revolutionized the sector, to the point where the places they offer are more than double the number of hotel rooms in the main cities. The impact of the boom of these platforms has placed constraints on occupancy rates, prices and revenues in the formal hotel sector, which is subject to greater regulatory oversight.

Original Story: ProOrbyt Expansion – Inma Benedito

Translation: Richard Turner