Around the world, hotels are competing with different accommodation types for travel demand, and throughout 2020, that race was much tighter as COVID-19 restricted domestic and international travel.

Robert Bauer, STR's manager of business intelligence, shared the latest performance trends for hostels, short-term rentals and serviced apartments and how they compare to hotels in "Alternative Accommodations: Comparing Hotel Performance to Other Accommodation Types" as part of the online Hotel Data Conference: Global Edition. STR is CoStar Group's hospitality analytics firm.

In European destinations such as Amsterdam, hostel demand — like hotel demand — steeply fell within the first few months of the COVID-19 pandemic. Year-over-year decreases in revenue per available bed — STR's hostel benchmarking metric — improved slightly from July 2020 through September 2020, but after the summer, it returned to steep declines.

"The hostel business model creates a culture around exchange, socializing, getting to know people, traveling in groups and often hopping from one city to another. All of these things heavily contradict the strict advice for social distancing," Bauer said.

A look at Amsterdam and Berlin shows hostel and hotel occupancy in those markets experienced similar performance trends throughout 2020. Bauer said European hostels pretty closely align with midscale and economy hotels, the lower segments in the hotel space.

"What we have been hearing from operators are that in some cases, even if dorms are open in limited capacity to the public, guests are not infrequently buying out the whole dorm for themselves or a group, like a family room," he said. "And that will drive occupancy, because those rooms and beds are marked as sold, even if the true capacity is not met."

While rates for hotels and hostels have similarly declined during the span of the pandemic, hostels additionally rely on ancillary revenue, such as "locker or linen rentals, [food and beverage], tickets and tours," Bauer said. That extra revenue has similarly fallen and contributed to the decline in hostels' total revenue per available bed.

Before COVID-19, occupancy for short-term rentals in the U.S. was about in line or even below the occupancy levels seen in comparable hotel segments, which are the upscale and upper-midscale classes, Bauer said. In an analysis of short-term rentals and hotels in Philadelphia, Miami and Nashville, short-term rental occupancy in the three markets has outpaced hotel occupancy since the start of the pandemic.

Average daily rate across hotels and short-term rentals in the three markets was pretty similar, with the exception of Nashville, he said. As COVID-19 restrictions lift, rates in both accommodation types should increase throughout 2021.

Bauer said U.S. short-term rentals seem to have the edge over hotels as travelers book longer stays.

"The hidden driver for occupancy is a change in average lengths of stay," he said. "Even though we associate the name short-term rental with short stays, the pandemic has shown a shift in travel behavior."

Average length of stay in short-term rentals in Miami and Philadelphia increased to more than a week from 2019 to 2020. In terms of rate, short-term rentals in Miami and Nashville had a $5 and $10 difference, respectively, from hotels in 2020.

"In Miami and Nashville, there is little difference between staying in a short-term rental and staying in a hotel, which means there’s very little competition based on rental price, and much more competition based on all the other amenities like [food and beverage], perceptions of safety and so on," he said.

In Europe, serviced apartments were able to keep more rooms online than hotels in the year since countries began imposing strict COVID-19 lockdowns, Bauer said.

Elsewhere in the world, serviced apartments reported less drastic occupancy declines than hotels, especially in the Asia-Pacific region.

"In Australia, China and Japan, the general decline in March was less heavy than with hotels," Bauer said. "China and Australia serviced apartments recorded generally higher occupancy levels throughout the year."

In terms of rate, both serviced apartments and hotels in Europe, the Middle East and Africa, and Asia-Pacific saw similar decreases.

"When comparing serviced apartments to the total hotel industry, it shows very clearly that this sector has been able to buffer the impact of the pandemic more than the total hotel sector was able to," Bauer said.