← Back to the blog

Keep Calm and Carry On

Jason Pinto, Co-founder & COO
Mar 9, 2020 - 2 min read

COVID-19 has had a dramatic and tragic impact on the lives of millions, with now over one hundred thousand confirmed cases and close to four thousand deaths. Many more will be afflicted, and governments have their hands full equipping the health services to deal with the increasing numbers of cases.

There is clear advice from various governmental and non-governmental health services about how to prepare for and deal with COVID-19 - so we will leave that to the experts.

What is less clear is how businesses should prepare for what could in the worst case turn out to be a serious disruption.

Hoteliers have already suffered material drops in occupancy particularly in Asian markets where the virus originated. This drop in occupancy has unsurprisingly lead to a drop in ADRs as hoteliers attempt to make up for falling occupancy by reducing rates in an attempt to stimulate demand.

Taken together, reduced occupancy and ADRs has resulted in significant falls in RevPAR versus the same time last year across Asian hotels according to recent analysis by STR.

The European market has also started to see similar effects with the Italian market most seriously impacted by the recent deepening of the epidemic there. The US market will not be immune from these effects as the virus continues its global spread.

The fear associated with the virus will spread further and faster than the virus itself.

As in the financial markets, the strategy for hoteliers is the same: keep calm and carry on. Carry on in this context means don’t panic and arbitrarily drop your ADR in the hope that demand is elastic and will respond to this change in ADR.

Here, the Pace solution has you covered. Our algorithms will explore the price space to constantly optimise around available demand. In the short term the algorithms will react to weakened demand and cancellations but will also be constantly sampling for the eventual return of this demand.

In previous pandemic scares demand was seen to rapidly return to markets once the global health agencies reported positive news. So sentiment matters in this environment even more so than it normally does.

Stay up to date using STR resources

← Back to the blog

Subscribe to our newsletter

The latest news, articles, and resources, sent to your inbox weekly.

©2018-2020 Pace. All rights reserved.