Beonprice examines demand and pricing of Spanish market during COVID-19

Eloise Hanson Eloise Hanson Uploaded 31 March 2020

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Spain: Cloud revenue strategy solution Beonprice analyses how demand is being affected in the mid to long term, and what impact the demand situation has on pricing in Madrid and Barcelona.

In the past week, business on the books in Madrid fell by three per cent, despite the tendency to move towards a date of positive growth. This trend is noted in Madrid occupancy levels, which compared to the same point in time in 2019, shows a negative pick up of -16 per cent.

There are hence more cancellations than bookings, which is most apparent in the month of May where there is significant worsening of occupancy levels until the end of the month.

From the middle of June onwards the situation does not seem to change significantly, suggesting that whilst people are not booking travel for these dates, they are also not cancelling long term reservations - presumably waiting to see how the COVID-19 situation develops over the next few weeks. 

In public pricing over the next six months, there is a typical pricing pattern for a city like Madrid, with a slightly lower price in the summer months and peaks in September/October covering city-wide events.

Pricing for May and June is practically identical, although the demand behaviour is completely different. Beonprice advises that revenue managers in Madrid should be taking into account the new demand patterns, and adjusting their prices in order to catch the limited bookings still available in the marketplace. 

In Barcelona, occupancy levels on the books compared to last week and to the same point in time last year shows a similar picture to Madrid: -16 per cent negative pick up in May, with no significant cancellations from mid-June onwards.

The gap between this year and last year is significant, and continues until almost the end of June. This suggests that the destination may take a little longer to recover.

Pricing data shows little reaction despite changes in demand. In May for example, pricing peaks for the F1 weekend (8 and 9 May) even though this event has already been postponed.

Bearing in mind this data, Beonprice has some recommendations for teams to focus on in the mid to long term:

  • Adjust pricing according to the new demand situation. This doesn't mean going crazy and slashing prices, but it does mean pricing to sell. Keep a close eye on updates around travel bans and hotel closures in domestic and international markets, as this can have an affect.  
  • Be on top of events. At present many events are being cancelled, postponed, or held without public, which obviously has an impact on demand. Most hotels set high prices for these excess demand dates well in advance, and pricing should be received to checked it still makes sense. 
  • Don't make any drastic changes to long term strategies. Keep an eye on developments and simply ensure that sufficient inventory is availabile on all channels.

The full report is available on the Beonprice blog here

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