Why domestic tourism could be the key to recovery - and how hoteliers can capture this demand

Train station berlin

It’s no secret that overall demand for accommodation is down, as COVID-19 and the Delta variant continue to hit numerous countries and international travel restrictions hamper tourists’ ability and will to travel abroad.

However, hoteliers need not lose hope as. After multiple lockdowns, there is plenty of pent-up demand for vacation, and domestic destinations are now squarely in focus for consumers.

In order for hotelier’s to drive revenue growth through 2021, it’s time to zero in on domestic demand. We’ll show you the stats that support this move, what you can do to understand demand and how to capture this critical market.

Domestic tourism is holding up in spite of the struggles

Whilst there can be no doubt that 2020 was a tough year for domestic and international tourism, the data clearly demonstrates that, when allowed, tourists continued to travel and book accommodation, giving a vital floor to the sector.

Eurostat data shows that nights spent by international guests in EU destinations plummeted by 70% in 2020 compared with 2019, compared to a more modest decline of 39% for domestic tourism. However, this headline data is overly pessimistic, as it only provides a demand picture from across the entire year, including multiple points of stringent lockdowns.

When travelers were allowed to move and book accommodation domestically, they did so, such as in the brief window during late summer 2020, when restrictions were widely relaxed by European governments. At this point, demand rapidly returned, with domestic travelers spending just 15% fewer nights in tourist accommodation in September 2020 compared with September 2019, for example.

It is a somewhat similar story so far in 2021. But with the consistent lowering of internal travel barriers there is a much more positive outlook - meaning domestic travel patterns need to be top of mind for hoteliers. 

Vaccination programmes and falling numbers of severe COVID cases have allowed governments in many places to relax restrictions and provided the opportunity for much more freedom of movement within countries or internal blocs, most notably from late April onwards. Whenever and wherever these announcements have taken place, we have seen big boosts to search and booking patterns.

A growing awareness of destinations close to home

We can observe these domestic travel trends by looking at examples from our Global Travel Search Trend data, which are generated by the millions of data points found in Market Insight.

German government advice and legal restrictions have been easing since early May, with official rulings on complete freedom of movement for those who have been vaccinated or recovered from COVID-19 passing through the Bundestag in the first week of that month. From then on, we have seen a strong and consistent rise in search and booking activity. 

Looking at the Index, we can see that there has been a rise across the board for accommodation searches to major German cities. In particular, Hamburg and Munich saw searches grow threefold from the beginning of May to the end of the month, driven overwhelmingly by German consumers.
German cities evolution

We can also see the pattern in Google search data, where the trend has continued into the summer and will drive the market for accommodation within Germany throughout 2021. Looking at the general search field for ‘accommodation’ for the German market, alongside the search keywords ‘urlaub Deutschland’, shows a closely matching pattern of peaks and troughs

We can see a sudden peak in interest following government announcements of easing in May, in a similar way to our Index data snapshot. However, where this gets even more encouraging is the skyrocketing search interest in both areas as this summer has progressed. Searches with these terms far exceed any pre-pandemic peak available in the last five years of data.

In the UK, we can see an important and similar dynamic emerging, with sudden peaks in interest for domestic travel reflecting the unique mix of circumstances we are currently experiencing. The term ‘staycation’ exploded in people’s search bars over the critical peak summer period in 2020, and has consistently risen since then throughout the course of 2021, underscoring how consumers are thinking about their breaks this year, and the growing awareness of domestic travel possibilities. 

Much like in  Germany, we can also see peaks in interest for terms related to vacationing within consumers’ own borders, due to changing policy and recommendations. Looking at the search term ‘holiday England’ over the last five years, there is a relatively consistent pattern of rises and falls. This was then disrupted with a noticeable peak in July 2020, which has been followed this year by a massive surge in searches that goes far beyond any point available in the data.

Or take Vancouver, where hotel searches increased by 122% from the end of February to late June in our data. Breaking down that demand reveals that searches came from typical mainstay markets in the US and Asia were few and far between, with just 7.6% of the volume coming from the former. Instead 89.1% of queries came from Canadians.

Hoteliers also need to consider interrelated regional markets, where there may be key agreements to allow some travelers to move, with low or no restrictions, between nearby nations. This is well demonstrated in Scandinavia, where Finland, Sweden, Norway and Denmark agreed that their citizens could move between the countries without presenting COVID-free certificates as part of a travel ‘bubble’. Once that was announced by regional governments in May, and subsequently came into force in late May, hotel searches soared, with Oslo experiencing a more than four-fold increase in those looking at the city compared to the first quarter of 2021.
Flight search evolution scandinavia

We can observe a similar pattern in Italy, where restrictions have been eased to allow much smoother travel from within the EU. When we broke down the data for searches for Rome, where recent figures show an extremely strong rise in interest, 70% of searches are coming from Europe and 25% from within Italy.

We can see there is plenty of pent-up demand from consumers who want to make journeys and finally escape the confines of their own homes -  even if that is just a brief stay only a short distance from their place of residence in a safe neighboring country. Our data indicates that where travelers are allowed to move and book relatively freely, there is extremely strong domestic demand. It appears that the market for internal stays is strengthening above 2020 levels in these key summer months and, in some cases, exceeding pre-pandemic levels. 

Nevertheless, concerns of further waves and the rapid evolution of the virus means that this can all change rapidly. This in turn is pushing a rise in short search windows and brief length of stays. It also means that this dynamic of poorly-performing international travel but strong internal demand looks set to continue for the foreseeable future.

Capitalizing on a rising tide

The message is clear from the data: domestic markets are the ones you need to make the most out of in 2021, but agility will be key in order  to maximize potential. These markets are going to be critical to recovering from the pandemic, and the leading source of demand for accommodation for the foreseeable future within most countries.  

So, how do you capitalize on this potential and build funnels that find and target the demand effectively? Naturally you should keep track of restrictions, openings and events - but crucial decision making should be backed up by data.

One of the clearest patterns we can discern in the data is that domestic search and booking behavior immediately adjusts based on the restrictions that have been put in place or lifted. It’s critical to determine the effect of the changing travel allowances or restrictions on your market prior to the competition. 

With a predictive demand solution hoteliers can try to confirm how public health policy is affecting demand and extrapolate key patterns, especially if major events are allowed to go ahead. These can be especially important in generating search and booking interest, often directing already pent-up demand to your hotel. 

For example, leveraging Market Insight, we found a massive spike in searches for accommodation in Manchester, England in February. This uptick came after the government announced that restrictions would be lifted, and following this, the media reported that Manchester Pride Festival would be taking place in the city. That media attention occurred on 26th February and resulted in an immediate spike in search interest occurring that week. 

This underlines the need to have an up-to-date picture of what domestic travelers are permitted to do. It is also essential to be nimble in reacting to both predictive search data and announcements of key local events.

 Manchester pride search evolution

Agility in understanding demand and tailoring your marketing is currently a major advantage to step ahead of your compset, so consider how to be as efficient as possible and look at a predictive market intelligence solution that rapidly collates data and makes it easy to parse findings. 

Form a predictive picture, react fast and push the right marketing buttons

Forward looking indicators of demand are vital, allowing marketers and revenue managers to understand what is coming their way and act accordingly. As demonstrated previously, situations are changing incredibly quickly, and you need to be able to understand these changes immediately to then put in place the right pricing strategy and apportion marketing spend correctly. 

This is especially important when the normal rules and patterns have been thrown out of the window. To explore this, we can look at how the search times have evolved for two cities where restrictions have been eased, and how such a change would need to be reflected in your overall strategy. In the cases of both Munich and Oslo, travelers rapidly evolved from searching for trips far in the future, potentially still in the initial planning or dreaming phases. Instead, this changed to a much shorter search window almost as soon as restrictions were easing for internal or regional travelers.
Oslo search lead time evolution

Early in the year, well over 50% of the searches for hotel accommodation for Oslo were being made for dates 90 days or more out from the time of research at the start of the year, which then plummeted down below 15% by July. 

In the case of Munich, when looking at the critical months of April and May 2021, the whole search window flipped on its head as consumers became more confident of the country opening up. Lead times of between 0 - 28 days went from a low of less than 25% of searches to making up 50% of all searches by late May. Munich search evolution

This emphasizes that consumer behavior is extremely malleable - you need to be able to see and react to these changes.  By understanding these trends as they are happening you can gain a key competitive advantage when designing promotions, offers and rates and developing a marketing strategy.  

With a powerful  predictive market intelligence tool like Market Insight, you can now see in real time where demand is originating and how it develops. To complement this, Revenue Insight then allows you to analyze how this demand interacts with your own campaigns, promotions, offers and availability by assessing and tracking pick-up, pace and cancellations. 

At a time where previous demand patterns cannot be relied upon, and entire segments of the market are not operating, information that models what is truly happening on-the-ground is critical to drive revenue from domestic travelers but also those from abroad. Hoteliers need to utilize forward looking indicators, such as flight and hotel demand, search patterns, lead times, average length-of-stay, occupancy rates and cancellations as a complete dataset. 

From here, they can identify windows of opportunity in which to act. For example, by using Market Insight, The Metropol Hotel, noticed a new destination was actively searching for Moscow, and by launching a digital campaign in Google to target consumers in that destination; the hotel increased the number of bookings by 42.5% and reduced cost per action by 30%. CPA is an online advertising model, determining how much you pay per ‘action,’ such as a booking. 

The more touch points required before a conversion, the more expensive your advertising. Therefore, with the more targeted advertising approach enabled by Market Insight, the hotel’s CPA fell.


Even though domestic demand has returned, and in some cases, exceeded pre-pandemic levels, the lack of international travel means it is still a reduced overall travel market. Therefore, you need to judge the level of demand in the market accurately when it comes to optimizing your hotel revenue, in order to avoid losing business to your competitors.

For example, is demand soaring for your properties from a captive market eager to rush out to the countryside? Or are you a city hotelier who needs to keep prices low to stimulate demand as concerns abound regarding COVID-19 infections? An understanding of the compset and pricing activity – alongside demand indicators – is critical to be able to capitalize on the situation and maximize RevPAR. It is important to also consider how your competition is shifting in this moment of extreme flux. 

For example, in some markets, alternative accommodation has flourished. AirDNA noted that as of June 2020 the US has reached a record rate of occupancy for short-term rentals and that demand is 9.2% above 2019 levels. You need to evolve just as the market is. A dynamic compset that reflects how your potential customers shop and book is increasingly key. 

Fine tuning a dynamic pricing and marketing strategy has never been more important, particularly as less price-sensitive market segments, such as MICE are currently negligible. Utilizing an integrated tech stack at your hotel, including a rate shopper, business intelligence tool and forecasting solution, to create a comprehensive price, market and business intelligence suite can give you an edge when it comes to revenue management in recovery.. 

If you are armed with the right information, which starts with a predictive demand solution, and you have the capacity to react in a timely manner with actionable insights, you’re giving yourself the best chance possible  to succeed. Capturing those critical domestic travelers and driving business growth in the second half of the year.

Ready to uncover revenue opportunities in your domestic market? Discover all of the benefits of Market Insight now!