Extract from STR

When will customers have the confidence to book 12 months in advance? When will events return with notable abilities?

As we saw in a previous article, booking windows have shrunk considerably since the start of the pandemic. In this last article, we analyzed two of the main factors contributing to the reduction of booking windows: current volatility and consumer confidence.

Current volatility

To assess the volatility of bookings, we focus on Forward STAR data for a pair of markets in Spain.

From May to October 2021, the Canary Islands occupancy rate on the books remains between 10-20%, and beyond those months the metric stays below 10% with only occasional lifts. The Balearic Islands follow a similar pattern with limited movements for the high season (June-August). While slight increases appear, occupancy on the books remains below the 20% level for most of the peak season. As of March 1, the market’s highest book occupancy rates were only 20.1% (June 19) and 20.7% (June 17).

However, it’s important to note that the pandemic has shifted the trend of customers towards shorter booking periods. An increase in leisure travel, particularly domestic leisure travel, could push levels up in the coming months.

Historically, long-term business has relied on demand driven by events, peak nights (where customers already feel like they need to book early), or group activities. All of these long-lead drivers are to some extent null and void now, and while all have a role to play in the recovery, it is difficult to determine just how widespread they will become as they were before the pandemic. There will be long-term business, but markets like the Balearic Islands will become more competitive than normal, with the desire to “do investment banking”. All of this is in the hands of the customer as it will ultimately lead to more favorable rates.

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