Little Leisure and Nearly Zero Trade Fairs

Fairmas Hotel Report

AUGUST 2020 EDITION

PERFORMANCE ANALYSIS OF AUGUST 2020

IN SOME MAJOR DESTINATIONS IN GERMANY

AND A VIEW OF THE NEXT THREE MONTHS

July 2020 – 20 million for the Corona Congress Fund

Occ: 36.6%, ADR: € 74.60, RevPar: € 27.30 It was no surprise that there were no fashion fairs in Berlin this summer. The organizer already announced its transfer to Frankfurt for 2021 a few weeks ago. This news was surprising for some. For the Berlin hotel industry, the move of the fashion fair means the loss of about 70,000 potential hotel customers who also have the reputation of being less price sensitive. The expected decrease in occupancy of -65.7% from the previous month's trend barometer shrank to -54.9% at the end of the month. However, the increase in occupancy also came at a price. The targeted average rate could not be maintained. Instead of -5.5%, the minus ended up at -14% at the end of the month. The drivers of the price decline were the 1-3 star hotels. The price decrease in this category in July was -18.9%, with occupancy rate closing at 42.6%.

Aug: Occ: -62.7%, ADR: -3.4%, RevPar: -64.0% The positive result from July - which exceeded expectations - is encouraging and strengthens confidence in demand from domestic tourists. The trend barometer for August is practically unchanged compared to the expectations of the previous month. It is interesting to note that price expectations were also maintained.

Sep: Occ: -52.1%, ADR: -19.0%, RevPar: -61.2% Clear deterioration is apparent across all key figures. Events are likely to be held, but customers do not want to attend. With the end of the holiday season and the cancelled marathon, the ‘MICE’ customers are now more and more missing in the 3-star segment as well.

Oct: Occ: -44.5%, ADR: -8.6%, RevPar: -49.3% Comparing all A destinations, this is the most pessimistic expectation in terms of occupancy. Let's wait and see whether the Corona Congress Fund of the Berlin Senate will have an impact to strengthen the events industry. It promotes events with 50 or more 08|20 participants.

Fairmas Hotel Report © Fairmas 2020 in cooperation with STR – Powered by

July 2020 - Little Leisure and nearly zero trade fairs

Occ: 23.3%, ADR: € 86.30, RevPar: € 20.10 The month of July developed better than the trend barometer had predicted. This applies to all three key figures. One of our local hotel partners reported a "slightly better business performance" even though there was still no leisure demand. The analysis by hotel category shows: The highest decrease in occupancy rates was observed in the 5-star hotels, which simultaneously increased their room rate by 2.2% on average in July. The highest price discounts, as with all other A-destinations examined, can be found in the hotels with 3 or fewer star.

Aug: Occ: -63.6%, ADR: -7.1 %, RevPar: -66.2% August will be a classic holiday month, but due to Corona, there will be no demand-increasing leisure events. However, there is hope. The ‘CARAVAN’ fair takes place and even advertises on television. Nevertheless, according to a local hotel partner, the trade fair company seems to have about 50% fewer exhibitors. However, in the holiday season like now, the caravans probably sell almost by themselves.

Sep: Occ: -48.4%, ADR: -9.8%, RevPar: -53.5% The slight downward adjustment in the trend for September. Unfortunately, trade fairs converted to “digital” do not attract hotel guests. Düsseldorf trade fairs such as ‘BEAUTY’, ‘REHACARE’, ‘EXPOPHARM’ have been cancelled or postponed until 2021. The ‘Essener Sanitär Heizung Klima (Sanitary Heating Air conditioning)’ has also been cancelled and ‘DMEXCO’ in Cologne will be held digitally.

Oct: Occ: -41.7%, ADR: -44.3%, RevPar: -67.5% Extreme damage at the room rate. The two biennial global trade fairs ‘Aluminium’ and ‘Glasstec’ have been cancelled. This means that about 70,000 trade fair visitors with a high percentage of international guests are missing. Both trade fairs have been postponed until 2021. ‘VeggieWorld Düsseldorf’ has also been postponed. It is scheduled to take place in March 2021. 08|20 © Fairmas 2020 in cooperation with STR – Powered by Fairmas Hotel Report

July 2020 - Minimum price discounts

Occ: 23.9%, ADR: € 83.70, RevPar: € 20.00 The city of banking, Frankfurt, and the city of fashion, Düsseldorf, are very close to each other in July. Both kept the price discounts from the previous year in the low single-digit range and both closed the month with occupancy rates that did not reach the quarter. The 4-star hotels had even raised their prices. On average, the room rate in this category rose by + 6.3% in July compared to the same month last year. In fact, with good justification, the Corona- related hygiene policy caused additional costs. Since business customers are likely to be guests who are not so concerned with price, this is certainly a strat- egy. Quote from the comments of one of our hotel partners: "The fact is - if there is almost no demand, there is no point in lowering the rates." Little to add on that.

Aug: Occ: -65.8%, ADR: 13.2%, RevPar: -61.3% The trend for August deteriorates significantly in occupancy by almost 10%. However, the increase in rates is being firmly maintained. This makes Frankfurt the flagship of the A destinations. No other city is expecting a price increase in August.

Sep: Occ: -51.1%, ADR: -12.3%, RevPar: -57.1% The trend in occupancy rates is deteriorating here as well - this time even in double digits from -36.2% to -51.1%. However, not only Frankfurt but many other cities are also affected by the crisis. The only cities that are more optimistic are Hamburg and Munich. Frank- furt's ‘Automechanika’ has been postponed by one year. The biennial fair ‘Light & Building’ from 27.09 - 02.10 has been canceled and will not take place again until March 2022.

Oct: Occ: -36.3%, ADR: -3.4%, RevPar: -38.5% The highlight in October has always been the book fair. It takes place, but as preferred in these days, it will be held mainly digitally. Un- fortunately, this leads to empty corridors in the hotels. Nevertheless, with -36.3% in occupancy, Frankfurt is the most optimistic of all A 08|20 destinations. ‘Texcare’, the leading international trade fair for textile care, now invites visitors in November 2021.

Fairmas Hotel Report © Fairmas 2020 in cooperation with STR – Powered by

July 2020 - Popular choice and somewhat cheaper than usual

Occ: 45.6%, ADR: € 92.00, RevPar: € 41.90 Hamburg falls out of the ordinary in July. In other words: The Hanseatic city achieves the best result of all A-destinations in July. In the trend barometer of the previous month, the hotel industry still expected -64.2% in terms of occupancy. But this leap also had its price. Instead of the targeted - 4.4 %, the ADR fell by -11.2% compared with the same month last year. A search for clues: Pretty sure it was not due to the cruise ship industry. The compulsory discontinuation of cruises caused by corona will remain until the beginning of August - except for short trips without shore leaves as a trial balloon. The theatre and musical houses were also closed. It is not yet possible to say when forced break of theatres comes to an end. So, it was probably the attractiveness of the city itself and the proximity to the coast of the North and Baltic Sea.

Aug: Occ: -44%, ADR: -1.8%, RevPar: -45.0% So much support is encouraging and leads to optimism in Hamburg without euphoria. This is due to the previous month's trend where occupancy rate was expected to be - 61 %, with -4.3% ADR. There is no euphoria because the expected decline in occupancy is higher than the July result. Let's have a look.

Sep: Occ: -39.0%, ADR: -1.9%, RevPar: -40.1% Again, another slight improvement and the most optimistic value compared to the other A destinations. Unfortunately, we have no supportive comments from our hotel partners for these conclusions. The marathon is cancelled, ‘WindEurope’ opens its doors in De- cember 2020.

Oct: Occ: -30.6%, ADR: 1.1%, RevPar: -29.9% The trend of October is the continuation of the last three months. Perhaps it is also combined with the hope that there will not be a second wave of infection. The ‘VeggieWorld Hamburg’ is postponed from May to October. 08|20 © Fairmas 2020 in cooperation with STR – Powered by Fairmas Hotel Report

July 2020 - 25% minus for a 3-star room

Occ: 36.2%, ADR: € 97.70, RevPar: € 28.90 The occupancy rate in Cologne is also showing better than expected in July. In return, however, higher discounts had to be accepted on the rate. The previous month's trend forecast: Occ -65.6%, ADR -2.1%, RevPar - 66.3%. In the end, this "swap" reduced the negative growth of RevPar to - 55.1%. Nevertheless, the overall picture of Cologne is a little more appeal- ing, since our analysis combines Cologne and Bonn. Bonn improves the average values with its good figures. If we look at the cities separately, the following emerge: Bonn: -42.5% occupancy, -3.0% ADR, -44.3% RevPar; Co- logne: -52.9% occupancy, -12.0% ADR and -58.7% RevPar as compared to the same month last year. The 3-star hotels in Cologne reduced their prices by -25%. According to the benchmarks, however, they did not achieve much. They closed July with negative growth of -52.3% compared to the previous year.

Aug: Occ: 59.5%, ADR: -25.6%, RevPar: -69.8% Quick explanation: ‘Gamescom’ will only take place virtually. Music festivals, festivals, and similar cultural events are prohibited until at least the end of October 2020. Events for up to 300 people require concept against infection.

Sep: Occ: -46.0%, ADR: -15.8%, RevPar: -54.5% Worse than Hamburg, but better than Berlin, Düsseldorf, Frankfurt, and Munich in terms of the level of the negative growth rate in occupancy. ‘DEMEXCO’ takes place digitally - no silver lining for hoteliers.

Oct: Occ: -42.0%, ADR: -9.3%, RevPar: -46.2% The ‘Veggie World Cologne’ seems still to take place. But it is rather small compared to 2019 where 6,000 visitors came. ‘INTER- MOT’ has been cancelled, the International Trade Fair for ‘Vending & Coffee Service’ and ‘ORGATEC’ have been postponed until 2022.

July 2020 - Double-digit price reduction at 5 star hotels as well

Occ: 29.7%, ADR: € 86.50, RevPar: € 25.70 In these times, forecasting is very challenging. As the state of Bavaria was rather cautious in terms of easing the Corona situation, expectations for occupancy in July were correspondingly low. However, instead of the expected -80.4%, 75.6% was achieved by the end of the month. Unfortunately, this was accompanied by significant rate cuts. The leisure business also appeared to be rather unpromising - the priority for tourists was not a city tour to Munich, as a comparative view of the leisure hotel industry (especially on the North and Baltic Seas) suggests. Once again, the highest discounts were offered by hotels with fewer stars. But unlike in the other A destinations, the 5-star hotels also reduced their room rates by a double-digit -16.1%.

Aug: Occ: -63.5%, ADR: -13.9%, RevPar: 68.6% Significant adjustment for the expected decrease in the room rate. It jumps from -22.2% to now -13.9%. There is also a slight improvement in occupancy. Let's see how the final summer month develops.

Sep: Occ: -44.3%, ADR: -33.7%, RevPar: -63.1% The outspoken pessimism also seems to have been lifted for September. Instead of -53.1%, the occupancy rate is currently expected to be -44.3%. Further easing and the recovery of corporate business are expected. ‘IFAT’ has been cancelled and will not return until 2022.

Oct: Occ: -43.4%, ADR: -29.4%, RevPar: -60.1% Not only the Oktoberfest is cancelled but also other events. The ‘Expo Real’ will not take place as well. Thus, another 45,000 hotel guests are missing in Munich. The postponed ‘Security Expo’ from June is to take place under conditions, as well as the ‘Analytica’. The ‘eMove360°’ is now a hybrid event, i.e. a combination of online plus "selected people to the event". 08|20 © Fairmas 2020 in cooperation with STR – Powered by Fairmas Hotel Report

Your contact in the Fairmas Hotel Report editorial team: Verena Bock, Marketing & Communications Fairmas GmbH Email: [email protected]

Data Basis and Methodology Last month's performance analysis is based on benchmark data from Fairmas GmbH in cooperation with STR of approx. 1,730 hotels in Germany. The occupancy figures given refer to room occupancy. The vast majority of these figures are transmitted directly to Fairmas or STR via system connections. The forecast for the coming months is taken from the trend barometer and supplemented by comments from selected partner hotels in the respective destinations.

The Fairmas Hotel Report is published by Fairmas GmbH, Sachsendamm 2, 10829 Berlin, Germany

Fairmas GmbH, based in Berlin, develops web-based financial planning, controlling and management reporting solutions as well as daily benchmarking specifically for the hotel industry. Currently, more than 11,000 users in more than 4,000 hotels worldwide work with our software products - from globally operating chain hotels to leisure hotels and privately managed hotels. Fairmas Benchmarking has been a reliable source of relevant hotel key figures and usable information since 2003.

Disclaimer No warranty or guarantee is given for the accuracy or completeness of the information contained in this publication. To the fullest extent permitted by law, Fairmas GmbH assumes no liability or responsibility for the possible consequences of actions, omissions or decisions that are based on this publication.