Coronavirus & the Hotel Industry – Responsibilities, Liabilities, Implications

Main Photo: The position as at February 8th 3pm

Date: February 2020

Location: Global

Name: Coronavirus

Why Hoteliers Should Take Note: Hoteliers have causes of concern. Chinese nationals comprise the largest tourist market in the world with 159 million outbound tourists in 2019, accounting for 12.2% of all outbound travellers globally and US $275 billion spent. If you cater to even a small percentage of these tourists, their absence will affect your bottom line.

On January 31, 2020, the Center for Disease Control (CDC) declared the Wuhan Coronavirus a public health emergency of international concern. The numbers of confirmed cases, as well as the death toll continues to climb. (For current statistics, see the Center for Systems Science and Engineering’s online dashboard that pulls data from the World Health Organization.)

Containing the spread of the disease is of global concern. Beyond the serious human health impacts, businesses worldwide expect disruptions in supply chains for manufactured goods, evidenced by the S&P’s sharp decline on January 31st. The U.S. has issued a “Do not travel to China” advisory, major U.S. airlines announced cancellations of flights to China, and President Trump announced a travel ban on foreign nationals who have travelled to China.

Do group travel organisers have contractual obligations to your hotel if they cancel trips due to the Coronavirus? ….If travellers in your hotel infect other guests, or your workforce, what is your liability?….If you have hotels in China, what responsibilities do you have toward foreign guests who cannot easily return to their home countries?….What do you do if your employees refuse to come to work for fear of becoming infected?

What policies and procedures should you put in place for managing these kinds of crises?….What exactly does your insurance cover?….How can you find experts who can help?

JMBM’s Global Hospitality Group® is working on practical steps to assist the hotel industry in dealing with this crisis. We hope the measures being taken by governments worldwide will contain the epidemic quickly and end the loss of life. We hope that safe global travel resumes soon, and that hoteliers can return to focusing on serving guests and generating revenue.

In addition to our team of seasoned hotel lawyers, we are able to draw on our broad network of professionals, including local lawyers in over 150 cities around the world, including 6 cities in China.

The Immediate Response: The immediate response in China, courtesy STR, as at 4th February 2020.

Tourism Economics, STR’s forecast partner, noted a potential 28% drop in visits to the U.S. from China in 2020. That would equal a loss of 4.6 million hotel room nights sold and $5.8 billion in visitor spending.

In the USA: The Baird/STR Hotel Stock Index dropped 7.7% in January. “Hotel stocks significantly under-performed in January as Coronavirus fears mounted,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Last year’s positive stock market momentum reversed course sharply, and investors have become increasingly concerned about how the spread of Coronavirus might impact global growth with hotel stocks being disproportionately impacted as a result. Industry RevPAR forecasts for 2020 continue to moderate, and most industry participants now are expecting flattish growth.”

“As presented at ALIS last week, we’re forecasting 2020 to be the industry’s first non-growth year in RevPAR since 2009,” said Amanda Hite, STR’s president. “Even though preliminary U.S. performance results for January have shown positive, the uncertainty around the Coronavirus outbreak on top of already modest growth expectations has created angst around the investment community. It will be some time before we know the extent of the Coronavirus impact on travel and lodging in the U.S., but this is no doubt a concern with global implications in the sector.

It is worth pointing out that the total number of Chinese visitors was expected to be around 2.8 million in 2020, and any disruption to this flow will impact local and national demand growth figures.”

THPT Comment: Jim Butler, author of this piece and and hotel lawyer, might be able to assist. Whichever way you look at it, the implication for hoteliers globally is worrying….however, as with previous global troubles, we will get through it!

First Seen: Hotel News Resource and Hotel News Now

The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.

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