Hotel industry is resilient and will bounce back as impact of COVID-19 lessens

The hotel industry’s vulnerabilities are multi-faceted, but its ability to deal with impactassociated with these vulnerabilities in the past stands it in good stead to overcome the coronavirus (COVID-19) pandemic, Ralph Hollister, Analyst, Travel & Tourism at GlobalData, offers his view:

“It is imperative that hotels across the globe remember how they have overcome a range of past crises such as natural disasters, the SARS outbreak and acts of terrorism when thinking through their strategies to handle the COVID-19 crisis.

As the impact of COVID-19 lessens and demand increases, it is crucial that hotels act in a proactive manner; by effectively managing room rates and marketing offers to maximize revenues.

Hotelwill re-open. The majority are still continuing to accept reservations for stays many months from now to maintain their revenue streams. One predicament hotels face is how to price their rooms during and after the COVID-19 pandemic with most hotel companies currently not rushing in to dropping prices too quickly or too severely.

The hotel industry recovered quickly following the containment of SARS in 2003 and the hope will be that a similar pattern will emerge after COVID-19 has run its course.

Hotels that are the fastest to drop their room rates and who provide the heaviest discounts will often be the last ones to recover when demand eventually returns. Many hotelwill not be able to return to their normal rates instantly after demand for travel returns. Many guests will not accept this steep hike in price. Hotels that heavily reduced rates due to COVID-19 will have to gradually increase price overtime to avoid deterring customers, this will prolong recovery.

“It will provide long term benefits for lodging providers to hold the line on rate-cutting. However, with a variety of short term financial commitments to meet like bank loans, investor returns and employee pay in the absence of government assistance many will have no choice but to discount room rates to bring in much needed cash.”

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