INTERNATIONAL REPORT—Occupancy and revenue per available room have spiked at certain European and Icelandic hotels because of ash from the Eyjafjallajokull volcano, but hoteliers are concerned about long-term business prospects.
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Bjorn Eriksson,
manager,
Hotel Ranga
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“It is up and down. We’re getting a lot of journalists from the U.S., but we’re also getting a huge amount of cancellations because of the grounded flights,” said Bjorn Eriksson, manager of Hotel Ranga in Hvolsvollur, Iceland, near the base of the volcano.
While some European groups have booked future dates at the Hotel Ranga, Eriksson is concerned tourism around the volcano is not sustainable long term.
“Our revenue is up 100 percent from the same time last year,” Eriksson said. “But, in the end, it is going to hamper our business. A hotel is 365 days a year.”
Airport hotels see a bump
Hotel revenue has also spiked at airport hotels and other hotels throughout Europe because of the grounded flights. The latest data from STR Global shows RevPAR gains of 137 percent for the week of 11 to 17 April for the hotels surrounding Brussels Airport, compared to the same week last year, and a spike of 369 percent for hotels around the Frankfurt Rhein-Main Airport. Other major gainers last week include: Stockholm (up 75 percent), Heathrow (up 70 percent), Amsterdam Schiphol (up 69 percent), and Gatwick (up 40 percent).
“Hotels near airports are filling up first, and then hotels further into the cities have picked up business as well,” said Michael Poynter, senior VP and managing director of Europe, Middle East and Africa for Wyndham Hotel Group.
Benefits and drawbacks
Executives with the British Hotels Association in London are concerned with what the eruption might mean for tourism.
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Eyjafjallajokull volcano. Photo credit: Steinni Fjall
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“It may be that, for the next weeks, people who are keen to visit the U.K. will be reluctant to come because they fear problems in getting back,” said BHA spokesman Miles Quest. “We don’t know what the long-term problem may be.”
However, the short-term benefits to United Kingdom hotels are undeniable.
“Airport hotels on Friday and over the weekend were very full, with people being unable to fly back,” Quest said. “Central London, too, was very busy … and provincial hotels were also affected as people flying from Glasgow, Edinburgh, Manchester (and other cities) have been obliged to stay in those cities.”
The impact on earnings for international hotel chains remains to be seen. Hilton Worldwide has experienced both lost business and some benefits. “As a result of the flight disruptions, we have seen some cancellations, while other guests have extended their stay with us,” according to a statement from the chain.
U.K.-based global chain InterContinental Hotels Group is realizing benefits at some of its hotels from stranded travelers, but the volcano has also been a negative, too.
“In the short term, we’ve seen an increase in bookings at airport hotels, particularly in the U.K. and European gateway cities,” said Kirk Kinsell, president of Europe, Middle East and Africa. “We’ve also had some cancellations, but people seem to be making last-minute decisions as they wait to see what will happen with the travel restrictions.”
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Eyjafjallajokull volcano. Photo credit: Steinni Fjall
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Short-term benefits for IHG include an increase in room rates at some of its European properties because of the high demand.
“We’re not trying to take advantage of the situation,” Kinsell said. “Room rates are determined by current availability at each individual hotel, and the demand for rooms has taken our prices to the top of our existing rate structure.”
Wyndham’s Europe, Middle East, and Africa properties are experiencing both guests who want to extend their stay and some who don’t show.
“WHG hotels are responding to this with as much flexibility as possible,” Poynter said. “If customers don’t show because of an act of nature outside of their control, we ask hotels not to charge them for the room.”
In addition, Wyndham franchisees are not “making any significant changes” to hotel room rates, Poynter said.
Promotions increase
Meanwhile, hotels in the U.S. and other countries are trying to capture incremental business from stranded travelers.
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| Business has been up and down at the Hotel Ranga in Hvolsvollur, Iceland, near the base of the volcano. Photo credit: Steinni Fjall |
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In the U.S., New York City mayor Michael Bloomberg said this week more than 30 hotels are offering 15-percent discounts for stranded travelers. In Orlando—which draws 38,000 visitors from Western Europe daily—hotels and vacation-home providers are getting on board with discounts.
For example, the Radisson Hotel Orlando—Lake Buena Vista is offering a “special rate” for passengers who are stranded in Orlando and show their boarding passes.
In addition, Hotel Ranga, certain Fosshotels, and other properties in Iceland are working with Icelandair to capitalize on the unique tourism opportunity for Iceland.
“The U.S. is open, and the U.S. is our second biggest market,” Eriksson said.
Icelandair recently launched a “Build Your Own Volcano” package, with includes round-trip airfare from Seattle, Boston and New York to Reykjavik, a two-night stay at a Fosshotel property, and daily buffet breakfast. Rates for the package start at US$599 each.
