Across mainland Europe, hotels in key markets have been permitted to open once more. The challenge now will be persuading guests to be comfortable enough to visit and make bookings over the summer.
By mid-May, hotels in Belgium, Switzerland, the Netherlands, Poland, Spain and Sweden were open, albeit some with initially draconian limitations on operation, limiting capacity. Across Germany, a state by state opening is taking place, while Austria will also allow openings at the end of May.
Elsewhere, more conservative approaches are being taken in the UK, France and Ireland, with no immediate end to the covid-19 lockdown.
However, most hoteliers are expecting to focus on driving domestic demand, as several countries continue to debate whether they should open borders. This, in turn, is restricting the actions of airlines in restarting cross border flights.
Ryanair wants to have around 1,000 flights a day operating by July 1. Holiday group Jet2 has said it will restart flights on 17 June, while TUI expects to restart on Jun 12. Easyjet continues to cancel flights on a rolling seven-day basis, declaring it is maintaining its aircraft ready to roll at short notice.
In Germany, Deutsche Hospitality has already opened its Steigenberger hotel in Hamburg, and expects to reopen many more in the last week of May, with further reopenings through June.
At Accor, the company said on 18 May that 42% of its global portfolio was now open, with 250 hotels reopened since the end of April. Spanish group NH expects to have 30 of its northern European hotels open by the end of May, with those in the south of the continent reopening in early June. CEO Ramon Aragones commented: “Our obsession is to give an agile response to the security needs of travelers and internal teams during the reopening of hotels, which is expected to be gradual and driven initially by domestic demand”.
Further afield, STR is reporting that hotels in China are now seeing occupancies of around 40%, as domestic tourism returns, and business travel starts to grow once more.
In New Zealand, meanwhile, success in minimising the impact of coronavirus means businesses in the country are opening up more quickly. The government is permitting business gatherings of up to 100 people, allowing hotels to start reopening meeting rooms.
“From here, the cap may increase in phases, although we don’t have any certainty around if or when these phases might begin, which of course makes planning extremely difficult,” said Conventions & Incentives New Zealand chief executive, Lisa Hopkins. She is lobbying government to allow groups of up to 500 to be permitted, arguing that registration and contact tracing systems will ensure them to be safely managed.
HA Perspective [by Andrew Sangster]: And so hotels reopen. It’s back to normal. But it isn’t. We are still under the shadow of the virus and will be until there is a vaccine.
We are in the post-lockdown pre-vaccine interim, as we remark elsewhere in this week’s issue of Hotel Analyst Perspective. There is no certainty about how long this will last. Some believe the end of the summer, by when there will be a vaccine. More realistically, widespread adoption of a vaccine is 18 to 24 months away.
It could, of course, be even longer. It may prove impossible to develop a vaccine. But adequate testing, tracing and therapeutics should within 24 months make returning to something like normality possible.
Meanwhile, hotels have to operate in an environment where making a profit is challenging in the extreme. Most hotels are likely to remain unprofitable unless some form of radical operating cost cutting is achieved. Given that meaningful productivity improvements in hotelkeeping have eluded the industry since its creation, that looks an optimistic bet.
As an investor, the bet is on being able to make up the losses endured in these years in the upturn that follows. It could well be possible, particularly if we see a return to significant levels of inflation.
But timing is going to be everything.