ITB Cancelation: a snapshot of the Berlin Short-Term rental landscape

ITB is the world’s largest tourism trade fair. It takes place every year in Messe, Berlin and has been a going for 54 years.

The event gathers 10,000 exhibitors in Messe, concentrating a total of 160,000 visitors in 2019 in its 160,000 sqm venue. ITB generated a 7Bn Euro turnover last year according to their website.

This year however, the event will welcome no visitors as the Federal Ministry of Health and the Federal Ministry of Economics have decided to cancel the event due to fear over the spread of the coronavirus (COVID-19).

Together with Skift, Transparent has looked at how this cancellation impacted the short-term rental landscape in Berlin.

First, we would like to put things in perspective. The fair welcomed 113,500 visitors last year, of which 47% were from outside Germany. This means at least 53,345 visitors had to travel from abroad to attend the trade show.

The hotel market in comparison has a supply of 55,012 rooms. According to Transparent’s estimates, the Berlin short-term rental market has a capacity of 17,989 bedrooms. Similarly to what happens in other destinations, the short-term rental supply in the city offers a complementary supply in period of high compression.

This is how the hotel:VR capacity ratio compares with the top 10 European short-term rental markets:

This chart shows that cities like Rome, Lisbon, Saint Petersburg or Budapest have a larger short-term rental inventory than hotel inventory. Berlin is on the lowest end of the spectrum with a ratio of 3 hotel rooms for every vacation rental bedroom.

Berlin short-term rental inventory

When we break down the supply by district, this is how the Berlin STR supply looks:

The area next to the conference is actually poorly provisioned with short-term rentals with most of the offering concentrated in more central districts such as Mitte, Friedrichshain-Kreuzberg, Prenzlauer Berg or Neukölln for instance.

When compared with other European markets, the Berlin vacation rental market is also relatively small:

Berlin offers 1 STR bedroom for every 208 of its inhabitants, while Lisbon for instance has 1 vacation rental bedroom listed per every 15 inhabitants.

It is notable that in Berlin, the short-term rental market is not as professionalized as other markets. As the chart below illustrates, the ratio of multi listings hosts is much lower than others, with only 34% of its listings managed by multi listing hosts. In comparison, cities like Saint Petersburg, Rome, Barcelona or Lisbon have more than 2/3 of their supply managed by multi listing hosts.

The ITB Cancellation

In the 2019 Berlin ITB edition, the vacation rental market showed a surge in average daily rate, with a peak of 115€ on March 6th 2019 – day 1 of the conference:

This year, during the week prior to the event, the average advertised ADR for the days of the ITB was 119€. Right after the announcement, Transparent tracked a small increase of rate to 121€.

This is likely due to the cancellation of the event being so close to the start date, and hosts not having time to adjust their rates appropriately. Further, unlike the Barcelona market reacting to its MWC cancellation, Berlin’s STR offering being less professionalized, it is expected that they do not react as strongly or consistently to the ITB cancellation.

Ultimately, we have observed less of an impact to Berlin’s VR market that was perhaps anticipated. We have deduced that this is likely due to the proximity of cancelation to the event, a smaller supply, and fewer ‘professional’ multi listing hosts.

The lateness of the cancellation rendered most cancellation policies useless, but gave property managers no time to pivot and attract alternative business.
Meanwhile, Berlin’s smaller supply – despite the size of the city and its visitor numbers – could suggest that a bigger proportion was occupied by non-conference goers. Further, with less stock there is therefore a smaller potential revenue to be affected.
Finally, the smaller proportion of multi-listing hosts in the German capital means that the overall effects were diluted across many private hosts, rather than businesses, bringing less of an impact to the professional VR sector.

Indeed, these effects pale into insignificance compared with the impact of Barcelona’s Mobile World Congress cancelation in February. In an article into the impacts of that MWC cancelation, Transparent estimated the potential loss of property manager revenue through refunds to be up to €4 million. See our post right here:

Transparent have harnessed the power of these data insights, and plugged them into a user-friendly PM dashboard. This dashboard empowers property managers to get ahead of their competitors with rate, demand and supply insights day by day for the coming year.