During the last two weeks at Roiback we continue to observe with optimism the evolution of our clients’ sales, but we are also noticing more and more where the biggest problem for hoteliers is right now: cancellations.
Globally, the decreases versus last year in the number of bookings continue their trend change and we are already far from the figures between -76% and -86% that we experienced in March and April, which had an improvement in May and that in the last weeks of June are already closer to -30%, still very bad figures, especially if we compare them with the +38% growth that Roiback hotels had in their direct channel before the pandemic.
We see how demand and bookings for Spain continue to increase, mainly from the domestic and German markets for stays this summer, and also from the British market, which in recent weeks has been the fastest growing source market for Spain, both for stays this summer and for next season.
For Mexico, especially in the Mexican Caribbean, there is a slowdown mainly in the U.S. market and in Colombia there are still no signs of recovery as its borders are still closed to international tourists and even with significant limitations of internal movement and speculations of new confinements in the capital.
Focusing the analysis in Spain, we see how the greatest progress is being made for the more holiday product, the progressive opening and decrease of limitations to travel has coincided with the summer period and we see how week by week the number of bookings increases and the differential versus last year continues to decrease, no doubt these are reasons for optimism and force us to continue working to maximize all opportunities for our customers in the direct channel, but this analysis requires incorporating a variable that few are talking about, the cancellations.
After the avalanche of cancellations during the month of March caused by the outbreak of the pandemic, these last few months the market has been limited to observing the scarce sales that occurred and how the so-called “pick-up” of hotels for the summer did not arrive due to the great uncertainty in the market. The fact is that today the expected decrease in cancellations is not happening at the same speed as sales are recovering and this circumstance is transferring the uncertainty of the market to hoteliers.
In the following example we see the evolution of a Spanish holiday chain where the evolution of sales could generate very optimistic expectations since 4 weeks ago but when observing the variation of net bookings per week we see that until the last week we are not obtaining a weekly net higher than last year.
As there is greater certainty about the end of the restrictions on the entry of international tourists according to their market of origin in the different destinations, we expect the positive trend to continue, both in sales and in cancellations, since this last point is the one that is generating the greatest insecurity for hoteliers right now.
The increase in cancellations with respect to the previous year continues to be notorious, at over 40%, which is causing the net bookings to not increase at the desired rate and making the sales figures incomplete.
The impact of cancellations is conditioning the decision of hoteliers who still have doubts as to whether they should open this season. This increase in cancellations is mainly concentrated in the vacation segment, for the next two months, and has a greater impact on international clients than on domestic ones. We know that for some hoteliers the weight of those markets that continue to have a high ratio of cancellations in this period may condition them not to open their establishments this season.
Among the causes that are affecting this variable are those beyond the hotelier’s control, such as air connectivity with the main destinations, on which there are still continuous variations and cancellations by the airlines, and the opening of borders that is occurring asynchronously between different countries and that every day we are getting more information but not enough for the traveler.
Also the hotels’ own pricing and cancellation policies are conditioning this high number of cancellations, we are finding that the end customer is making multi-bookings benefiting from flexible cancellation policies having only interest in materializing one of them which artificially inflates sales and increases the cancellation ratio, additionally some very aggressive campaigns are causing customers who had not yet canceled to take advantage to cancel and book at a more advantageous price.
We must conclude that the number of cancellations should be one of the key variables to be analyzed in greater detail by hoteliers when making decisions regarding their opening during the current season and in the most tactical part of their pricing policy.