Cyprus room rates soar as occupancy lags in the pandemic world

25 mins read

For most of 2020, Cyprus hotels performed like the rest of the Mediterranean region – except when it came to average daily rate (ADR). According to STR, from April through December, Cyprus’ occupancy fell 56.1%, which was slightly worse than the average decrease (-45.0%) in other markets across the region. Nearly every market in the region (and the world) has experienced significantly lower occupancy due to travel restrictions during the pandemic. For Cyprus, the bottom came in December, with occupancy at just 20.7%. By comparison, the Mediterranean region bottomed out at 32.3% in December.

However, there has been one obvious difference in performance, which has been a bright spot for Cyprus. ADR skyrocketed 42.3% during the same nine-month period in the small, island nation. In fact, Cyprus’ ADR climbed to an all-time high of $278.97 in December. Meanwhile, ADR across the rest of the region was a modest $116.18.

To explain why, here are a few factors underlying Cyprus’ performance.

For one, Cyprus has the highest percentage of independent supply compared with the rest of the region. More than 85% of the hotels on the island are independents, leaving only 14.7% as chain-affiliated. This concentration of independent hotels is comparatively higher than other nations, such as 60% in Spain, 41% in the United Kingdom and approximately 78% for all other Mediterranean markets. Furthermore, global brands account for less than 3% of total supply in Cyprus.

While not true across the board, we have seen groups of independent hoteliers be more aggressive in pricing during the pandemic, which has driven up ADR, perhaps at the cost of sluggish occupancy.

Another potential reason underlying the ADR increase in the COVID-era is the hotel mix in Cyprus is geared toward the upper end of the chain scale. While most of the markets across the Mediterranean region offer ample lower-cost travel options, the Cyprus hotel market has a noticeable void – only 11.8% of hotel supply is economy or midscale, compared to 35.5% of supply in the region steering toward the lower end of the scale. Of course, less supply of midscale and economy options means that the ADR is skewed toward higher-end hotels.

A final factor to consider is that hotel supply is decreasing, but the island’s lure has not changed a bit. In fact, from December 2010 through December 2020, Cyprus’ hotel supply has decreased slightly (-3.3%), while supply for other markets across the Mediterranean has increased 1.3% overall. During that time, 20 hotels have shuttered in Cyprus, while only seven new hotels have opened. Fewer hotel options can lead to increased pricing power.

So, even though occupancy continues to struggle, like most other markets, ADR growth is a bright spot in an otherwise difficult time for the island nation.,51268491.html–176380930/–176381386/–176387345/–176390074/–176390537/


Leave a Reply

Your email address will not be published.

Previous Story

Hotel Nyack joins Hyatt’s Joie de Vivre brand

Next Story

Fairmont Pacific Rim and Fairmont Waterfront achieve health security verification