As a result of the COVID-19 pandemic, hotels around the world closed temporarily — some for the first time ever. The health of, and demand in, the individual markets in which these hotels are located factor into reopening timelines and decisions, said Kelsey Fenerty, research analyst at STR, CoStar’s hospitality analytics firm.

In a video presentation for the Hotel Data Conference Global Edition titled “Closed (Temporarily) for Business: An Analysis of Temporary Closures and Impact on Performance,” Fenerty said the number of closed hotels still was highest during the first lockdown in the spring of 2020, with Europe being the epicenter for closures.

Ivana Neskovic, senior manager of client services and regional accounts at STR, said in the STR database, “we still have more than 700,000 rooms closed.”

In Europe, with approximately 45 countries that have different government restrictions and measures, some markets have required hotels to close, and travel both domestically and internationally has been restricted and banned.

“International demand is the lifeblood of many markets in Europe,” and that has simply evaporated, Fenerty said.

“Luxury and upper-upscale hotels were closed to the highest levels, as business and group-dependent hotels shut their doors,” she said.

Countries such as Sweden and the U.S. were less affected due to more relaxed restrictions imposed by their governments.

Fenerty said hotels that remained open with reduced occupancy weren't necessarily in a better position than hotels that closed due to reduced pricing power.

“Hotels that stayed opened were able to best maintain occupancy when regulations were relaxed and will capitalize on the future when the second periods of lockdown will finish," she said. "Many of these hosted what demand there was … [but] pandemic demand was a double-edged sword, and the hotels that never closed lost more pricing power than some of the later openers.

“Hotels that opened in August and September, when the [United Kingdom] was experiencing a minor leisure demand surge, held prices relatively steadier than those that didn’t close," she said. "That might have been because hotels that remained opened had negotiated pricing for non-traditional demand that was lower than it would have been for leisure travelers.”

Neskovic said there is no clear sign of when the hotel landscape will return to something resembling normal.

“The majority of hotels are still uncertain about their reopening. No one knows how long this will last," she said. "What is apparent … is that the uncertainty of reopening is visible in all the different destinations across Europe.”

She added “it is only 3% of global hotel supply that [is] still closed … and only 1% of hotels that are permanently closed.”

For more data and insight from Fenerty and Neskovic, register for the Hotel Data Conference: Global Edition to watch the full presentation.