How my friend’s little hostel in Barcelona survived
“It is impossible to know how many of these closed hotels and hostels will reopen.”
By Nick Corbishley for WOLF STREET:
“After hitting rock bottom, we finally seem to be rounding the corner. At this rate, by the end of May, we could even break even for the month, for the first time since March last year,” says Pol. He and his two partners own Hostal Live Barcelona, a small two-storey hostel in central Barcelona that was closed for 12 months, from March 2020 to February 2021.
“We have no idea when, if at all, we will be able to rent the rooms at the prices we charged in 2018. But for now, at least, the worst seems to be behind us, barring another cataclysm. “, did he declare. .
It was touch and go for a while. The only reason Hostal Live is still in business is that Pol and his two partners had capital to draw on when the virus crisis hit. This capital was supposed to be used to expand the business. Instead, much of it was used to keep the business alive:
“As our bank manager said in March, the only reason we were eligible for an emergency loan was because we had no debt on our books and had savings to back it up, that we planned to spend to buy another hostel,” he said. . “We might still have that opportunity at some point further down the line. For now we are counting our blessings; many of our competitors haven’t gone that far.
Pol and his partners also owe a debt of gratitude to the Spanish government’s furlough scheme, which paid 70% of their workers’ wages and most of their social security costs for 14 consecutive months. The workers are still on leave, although Pol and his partners are now covering the limited hours they have worked since the hostel reopened.
Another lifeline was provided by the landlord, who in the fall agreed to a 50% reduction in rent for six months. When that period ended, he agreed to extend the terms for another six months.
Hostal Live finally reopened, but to just one of its two floors, in early March. At that time, Spain’s economy was still partially in lockdown, non-essential travel between regions was banned, and a 10 a.m. curfew was still in place. And there were hardly any tourists in Barcelona.
“The timing may seem strange,” says Pol. “But we wanted to make some big changes to the hostel before we properly reopened to overseas visitors. More importantly, we wanted to install and test a contactless key system so that our guests could access the reception, their rooms and other hotel areas with their phones. This would help minimize contact between customers and staff members for as long as this pandemic lasts.
But to fill its rooms at a time of virtual absence of tourism, Hostal Live had to offer historically low prices. In March this meant charging an average price of €30 per room per night, less than half the average price for a normal March. But the plan worked: people came to fill the halls, but not from as far away as usual.
“With the exception of a few French tourists, almost all the guests were Spanish. During the week we hosted workers who had come to Barcelona for the day and suddenly needed a bed for the night. At weekends we tended to attract young couples, often from the suburbs of Barcelona, who had pleasure rather than business in mind. By the end of the month, we had reached an occupancy rate of 15%. »
That may sound pitifully low but it was better than nothing, especially since most hotels in Spain weren’t even open. In the first quarter of this year, more than 70% of the country’s entire hotel stock remained closed, according to a report by STR and Cushman & Wakefield. Average revenue per available room (RevPAR), a metric widely used in the hospitality industry to measure the operational performance of an accommodation unit such as a hotel or motel, has decreased by 65% compared to the same period of 2020.
Spain’s share of tourism in GDP collapsed by more than half last year, to 5.5% from 12.4% in 2019, a study has found. This was after international tourist arrivals by air, land and sea plummeted 77% from a year earlier, to just 19 million foreign tourists. This trend continued until spring 2021. In March, according to the latest data available, the number of foreign tourist arrivals was still only 490,000, the lowest level for any March since at least 1995. This was the 13th consecutive monthly decline in tourist arrivals. .
“It is impossible to know how many of these closed hotels and hostels will reopen,” says Pol. “Many owners did not have such a large financial reserve when the crisis hit. The number of hotels for sale started to rise sharply last summer before leveling off at the start of this year.
In April this year, Hostal Live Barcelona opened its other floor to guests. By the end of the month, the occupancy rate had tripled to 44%. French and Italian tourists began to arrive in spurts. During the Easter holidays, all the rooms in the hostel were occupied. So far in May, the occupancy rate is 60%. And there’s still a week left.
This may be a far cry from pre-pandemic reality, when average monthly occupancy was 93%, but the trend is improving. Foreign tourists, mainly from France but also from Italy, Germany, Austria and the Czech Republic, now make up around half of the clientele. And Pol and his partners have been able to gradually increase the prices, even if they are only a fraction of what they normally would be.
The European tourism industry is finally open for business. EU countries officially agreed last week to welcome foreign travelers who have received one of the coronavirus vaccines approved by European regulators, of which there are currently four: Pfizer-BioNTech, Moderna, AstraZeneca and Johnson & Johnson. Vaccinated people will be allowed to enter the block if they received the last recommended dose at least 14 days before their arrival in the EU.
The UK government’s decision to remove Spain – and a host of other EU countries including France, Italy and Greece – from its coronavirus ‘green list’ has raised concerns. The move means UK travelers returning from Spain must continue to provide a negative test on arrival, quarantine for 10 days and take two home Covid-19 tests. UK government advice against tourist or leisure travel to countries on its amber list, such as Spain, could also invalidate travel insurance.
This could end up deterring many British tourists – a key market segment – from visiting Spain. In 2019, Spain welcomed over 18 million tourists from the UK, just under a quarter of the total.
Business travel is also in the doldrums. The Mobile World Congress, the largest mobile exhibition in the world, took place every year in Barcelona. Last year it was cancelled. This year it is due to take place at the end of June, but it has lost so many key exhibitors in recent weeks, including Samsung, Lenovo, Ericsson, Sony, Google, IBM, Nokia, Qualcomm and Oracle, that it is now dubbed the ” zombie show.” But event organizer GMSA insists the show must go on even as more and more attendees pull out.
The show – which normally hosts 110,000 attendees – is of vital importance to Barcelona’s tourism industry. Before the virus crisis, it generated around half a billion euros each year, much of which ended up in the pockets of hoteliers.
“Even if it happens with only a fraction of the normal number of participants, it could give the city and its businesses a chance to start getting back on their feet,” Pol said. By Nick Corbishley, for WOLF STREET.
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