Early market trends: Europe’s road to recovery

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With countries at different stages of the pandemic and travel happening at varying rates, Europe’s recovery will be anything but linear. But with its strong domestic traveler base, the DACH region may have a head start

Home to some of the first Coronavirus (COVID-19) hotspots outside of Asia, including Spain and Italy, the European market started to show early signs of recovery in June and July, with travellers across the continent embracing travel once again. 

“We’ve been in recovery now for about six weeks,” says Thomas Emanuel, Director at STR, a leading market data company. “We’ve started to see green shoots in the market since the traditional summer holidays began. Obviously, occupancy levels aren’t where they would usually be and the market’s still very much in the recovery stage, but the good news is that demand is picking up.”

Although some destinations appear to be leading recovery for the region - such as Germany, Austria and Switzerland - others face being forced back into lockdown as August brings a raft of new local Coronavirus breakouts. “We saw a dip in Belgium, for example, after a prominent second wave,” Emanuel continues. “Similarly, Spain saw some demand softening around its second wave, which was heightened by the quarantine of British travelers who make up the largest source market for the Spanish. So, while we are seeing those green shoots, there are still a lot of concerning situations unfolding.”

Demand for domestic and drive-to destinations 

Throughout the second quarter and into July, domestic room nights represented 70%* of newly booked room nights on Europe, along with the US, had the highest contribution to the improved domestic booking trend in the second quarter. Additionally, intention to travel domestically is growing, with 42% of travellers saying they plan to travel in the next three months, according to research** undertaken in June across five markets, including Italy, France and Germany. 

The majority of travel experts agree that countries with a strong domestic traveler base will bounce back before markets that depend more on long-haul tourism. “It’s the summer of the staycation, as cliche as that sounds,” says Emanuel. “Recovery in Europe is being driven by domestic, leisure demand, predominately to drive-to destinations.” 

'Compared to other regions in Europe, the DACH region is well-positioned'. Image: credit to Roman Kraft, Unsplash


Despite a boost in domestic demand, it hasn’t been enough to fill the gap left by international tourism, according to Alessandro Gambino, Owner of Gambino Hotels, a Munich-based hotel brand. “The international market is almost 100% non-existent. There are no flights coming in and, next to this, there are no events happening in Munich anymore. There’s only possible business from the leisure segment, which is predominantly domestic at the moment. So, for all the properties in the cities to share what little percentage of demand there is, it’s very hard.”

Urban destinations vs regional locations

In parallel with domestic demand is the preference for regional destinations, as local travellers opt for nature destinations to satisfy their need for rest and relaxation. “In normal times, cities get the highest search demand, but now people are increasingly searching for regional destinations,” says Nadine Stachel, Regional Manager at “Taking the top ten searches in May as an example, there were all of a sudden some destinations that you wouldn’t expect to see on a global level, such as Rügen and Lake Constance outperforming cities like Paris or London.” 

This search trend is helping accommodations that normally fly under the radar to gain traction as they surface more frequently. “In particular, there’s a higher demand for coastlines and sea areas, which isn’t unusual, but it’s more so now,” Stachel continues. “Second and third-tier cities and rural areas further away from the traditional hotspots are also benefiting from this trend, for example in Bavaria where you have lakes, mountains and hiking.” 

This leaves cities struggling to stimulate demand effectively with no meetings, incentives, conferencing and exhibitions (MICE) business to rely on. “There is currently no corporate travel or international MICE demand,” says Emanuel. “On top of that, you’ve got travelers who don’t want to be in a busy city, lots of attractions that are still closed and quarantines still in place, which further limits international visitation. All of these things are having a serious impact on large gateway cities.” 

This trend is reflected in the occupancy levels of cities versus regional destinations across the European market, which show a stark difference. According to STR data, during the week of August 3 through August 9, Amsterdam occupancy versus regional Holland was 41% and 70% respectively, Paris versus the rest of France was 27% and 64% respectively, Prague versus the rest of Czech Republic was 27% and 63% respectively, and London versus Brighton was 27% and 85% respectively.

Spotlight on: the DACH region 

With domestic demand currently fueling recovery for Europe, the DACH region - composed of Germany, Austria and Switzerland - is particularly well-positioned. With a higher proportion of domestic demand compared to other countries in Europe, DACH is less reliant on international and long-haul tourism. “Looking at external data, around 80% of room nights in Germany are generated by Germans, who tend to travel within their own country - even before the pandemic,” says Stachel. “Of course, a lot of German travellers usually spend their summer holidays abroad, but now they are also staying within the country or the DACH region.”

“Compared to other regions in Europe, the DACH region is well-positioned and I think that’s specifically because of the German customer,” she continues. “Looking at countries such as Spain, for example, it’s very dependent on international travel as it’s a typical summer destination and border closures significantly impacted its recovery. German and Austrians, on the other hand, do a lot of domestic travel normally, but now even more so.”


*Earnings disclosure data 2020

**Research commissioned by and independently conducted among a sample of adults who have taken a trip in the last 12 months. In total 3,509 respondents were polled including 609 from Germany, 677 from France, 723 from Great Britain, 750 from Italy and 750 from the US. Respondents completed an online survey between 25 June and 30 June 2020.


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Hero image: credit to Kyle Glenn, Unsplash
  • While some countries in Europe are showing early signs of recovery, others are being forced back into lockdown due to new local Coronavirus breakouts 
  • Countries with a strong domestic traveler base appear to be bouncing back quicker than markets that depend more on long-haul tourism
  • In parallel with domestic demand, travelers are increasingly searching for regional destinations among nature to satisfy their need for rest and relaxation
  • Composed of Germany, Austria and Switzerland, the DACH region is particularly well-positioned for recovery as it has a higher proportion of domestic demand compared to other countries in Europe