The Effect of Coronavirus on Hotels

Location: Global!

Time: Weeks, Months, Longer?


The Story so far: Firstly we have no bigger a crystal ball then you, our viewership…so please email us your thoughts….

This week thus far (12th March 2020) we see headlines like:

Coronavirus: Majorca hotels set to be closed for months as …From empty sidewalks to deserted hotels, Coronavirus is …Las Vegas: Coronavirus concerns shutter buffets at MGM …Hospitality sector calls for emergency coronavirus support …Marriott International says about 90 hotels are closed due to …Trump suspends Europe to US flights to fight Coronavirus …Italy Shuts Down All Stores Except Supermarkets And Pharmacies

OK so we have all seen this and right now we guess the senior figures in the Hospitality business are all convening management and board meetings to work what they are going to do….

…and the bottom line is not much, as we are in “react to events” mode. The first major sign in March was the cancellation of industry events such IHIF and ITB in Berlin in March, Mipem in Cannes, Arabian Hotel Investment Conference etc etc…not only denying the great and good in hotel investment the opportunity of meeting and doing business, but of course all those hotel beds and venue spaces being cancelled, not just for this industry, but pretty much across the board.

So bang goes EBITDA and the the main metric in hotel sales – yield or CAP rate, at least for 2020/21.

Wyndham Hotels and Resorts has closed about 70% of its hotels in China, and with fewer guests in those that remain open, Chief Financial Officer Michele Allen on the company’s recent earnings call. “We expect this to continue through at least the end of March,” Allen said. Allen reported a 75% drop in occupancy at Wyndham’s China properties.

On its earnings call, Wynn Resorts reported that it was losing as much as $2.6 million per day from closures in Macau due to the outbreak.

British Airways announced Monday (March 2nd 2020) it is reducing its frequency of service between London and New York — two places not yet hit especially hard by the epidemic. And United Airlines announced Wednesday that it is cutting its U.S. and Canada schedule by 10 percent for the month of April, and its international schedule (excluding Canada) by 20 percent, compared to its pre-Coronavirus plans.

And what are genuine issues and trends and what will simply be blamed on Coronavirus……Investor Phoenix Holdings has stalled a planned NIS100m investment in Israeli hotel group Brown Hotels. The deal has fallen over concerns about the impact of coronavirus on the sector, reports Globes.

Just a week ago March 3rd, according to Hotel Analyst’s Andrew Sangster, “The governor of the Bank of England told a parliamentary committee that he expects the economic impact of the virus to be less than that following the 2008 financial crash. But some economic models in the City have the economic impact at 5% of UK GDP, only just shy of the 6% impact of the 2008 crash.
Globally, central banks have already started cutting interest rates. The US Federal Reserve today (3rd March) cut rates by 50 basis points. There have also been cuts in Australia and Malaysia.”

The UK’s budget of yesterday, March 10th put in place as good a business support package as we could have expected, with a £30bn sum being pumped into the economy… The US Congress is set to vote on a sweeping aid package for people financially affected by the Coronavirus.

As we know we can talk ourselves into a downward spiral. So let’s support and the positive stories about this great industry we are in… Melia Hotels….Due to the current situation of uncertainty generated by the Coronavirus, Melia Hotels International have implemented a new addendum together with our group contracts that guarantees client’s we won’t charge cancellation fees in case that there is a sanitary alert in a destination where the event has to take place or in the destination where the clients are coming from.

Virgin Hotels… To assist guests whose travel may be impacted, we will waive cancellation fees or deposits for hotel stays through April 30 for guest(s) travelling from countries with a Level 2 or Level 3 designation from the CDC.

Back in mid February 2020, the New World Wuhan Hotel, managed by Rosewood Hotel Group, hosted medical workers to fighting against the coronavirus in China. “You are our role model as you risk your lives to help others,” said Sonia Cheng, CEO, Rosewood Hotel Group. “You guys are all heroes and we are proud of you.”

Amazon and Gates Foundation may team up to deliver Coronavirus test kits to Seattle homes
Amazon Care, the company’s virtual medical clinic for employees, is in talks with local public health organisations about using its logistics expertise to help deliver at-home Coronavirus testing kits to people’s homes in the Seattle area.

Specifically, Amazon Care has offered the Bill & Melinda Gates Foundation its assistance with a project that aims to provide kits to Seattle residents who suspect they have symptoms of the COVID-19 Coronavirus. The test kits include nose swabs that can be mailed to the University of Washington for analysis.

Main Photo: Where did all the people go?

Date Posted: March 2020

THPT Comment: Hold on to your hat…it’s going to be a bumpy ride…

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