Hotel prices in major Mediterranean destinations rise sharply compared to pre-pandemic averages
The crisis resulting from the COVDI19 pandemic has led to a marked decline in demand over the last year – with transatlantic travel being the most affected. Despite a slight recovery in the last recent months, the closure of some hotels, as well as the reduction in the purchasing power of travellers, has led to an increase in hotel prices. In order to analyse this variation, Mabrian Technologies has carried out a study on the evolution of hotel prices in the most popular Mediterranean destinations.
For this study, Mabrian analysed the average minimum price of a standard double room by destination and category published on the main online travel agencies. The analysis also includes average prices per country for overnight stays during July and August 2021. A comparison of the average prices published in online travel agencies during the same period in 2019 has also been included in order to understand the evolution of prices. This study is based on a sample of more than 73,000 hotels.
When analysing main Mediterranean destinations – Greece, Turkey, Italy, Spain and Portugal – we have noticed that hotel prices have increased significantly compared to the average prices of 2019.
Greece is, by far, the Mediterranean destination that had experimented the highest increase – growing a 31% for four stars hotels and 47% for five stars hotels. On the contrary, Turkey is the only Mediterranean country that has experienced a drop – of 4% – when it comes to three stars hotels.
What could be behind this? Whilst it is perhaps too soon and there are so many factors to make a definitive judgement, there are nonetheless many important points to consider.
Firstly, as many hotels still remain closed or only open partially, evidently this affects prices: less supply always increases prices if demand remains stable.
Equally the increase in prices in the five star category can perhaps be partly explained by the fact that more wealthy travellers are not put off by the high costs of PCR tests – and that older travellers, who are generally wealthier and more likely to be generally retired, are less likely to be concerned about quarantine restrictions on return. We’ve seen some evidence too that those that are travelling for holidays are spending longer periods of time in the destination, thus pushing up the total demand. There are of course other points to consider that might take more time for economists to analyse, including that hotels might be having to increase prices as their cost base has gone up due to COVID measures and / or needing to make up for lost revenues.
Finally, there is of course one other factor to consider and that is that international travel — and by that we mean transatlantic trips or journeys to Asia, and so on — have been reduced to a small fraction of their former levels. Desire to travel though has remained high so perhaps some of those people who previously wanted to do a trip to the US or Thailand — or indeed a cruise, which have almost entirely stopped -are now instead travelling in Europe, creating demand that previously would never have been there. In conclusion, whatever the underlying cause of this – and our estimation is that it is a combination of all the factors we mention – overall clearly this is encouraging to see, and we are hopeful that this should be sustainable for the foreseeable future.