Coronavirus: the hotelier's view

24 Mar 2020 by BusinessTraveller

Hotelier Derek Picot asks how long it may take for the hotel industry to recover from the crisis.

Business travellers will be more aware than most of the impact coronavirus (Covid-19) has had on both airlines and hotels, and the question is: how long will this go on for?

Hoteliers worldwide are experiencing trading circumstances that are unprecedented and are drawing up both short- and long-term plans to reduce costs and lay off staff. London hotels are reporting occupancies that have dropped in the third week of March to well below 50 per cent and – across the range, from three- to five-star – many will immediately close until possibly the end of June.

The general prognosis is that even when travel restrictions are removed, it will be well after the summer before there is any prospect of business improvement.

Hotels generally lose money when occupancy falls below 50 per cent, and the largest cost in any hospitality business is people. Generally, staff account for one-third of the total revenue for hotels in Europe and the US, and about a quarter in the Middle East and Asia.

The situation for the restaurant trade is even more critical, and while a customer might have been tempted to think that an eatery with tables and chairs on the street is an al fresco bistro and therefore allowed, the closing of restaurants and bars in many countries, and a lockdown announced in others, means that, in the UK, many of these have faced going bankrupt, until at least the measures announced last week.

Refund or rebook

Travellers who have booked well in advance will be wondering how safe their advance purchasing is in these unparalleled times. Some will have seen their summer trips already rendered impossible by government restrictions, but what about bookings in the autumn, or even next year? Well, the money may possibly be in peril. While airlines are generally offering refunds and the opportunity to rebook, and ferries are allowing non-refundable tickets to be taken in credit for the future, there is no such coordinated guarantee from the hotel trade.

Third-party websites such as Booking.com are offering assistance but there is no promise that you will get your money back if you can’t go, and travel insurance companies are not yet prepared to pay out for the rooms you might like to cancel unless you can prove you’re an unlucky victim of illness. Smaller hotels will be arguing that the money you’ve already deposited and agreed will be non-refundable as it will be needed simply to provide cashflow in dire times.

Larger hotel groups are more amenable. Hilton, Marriott International and Accor, for example, are being flexible. In regions affected by government-issued travel restrictions, the former two will waive change fees or offer full refunds, and any new or existing reservations made before April 30, 2020 – even those described as non-cancellable – can be changed or cancelled up to 24 hours before your arrival. Accor currently differs slightly from its counterparts depending on region and cut-off dates.

So what are hoteliers doing for you if you are overnighting during this crisis? It presents a tricky public relations challenge in those countries where hotels are still open. Many of the luxury groups take pride in the pristine cleanliness of their properties and are now challenged in conveying the key message that they intend to be even cleaner.

In response to the coronavirus, most have taken measures developed in consultation with global and local public health authorities (including the World Health Organisation and the Centers for Disease Control and Prevention) to make cleaning and hygiene protocols even more rigorous. Brands have expressed that personnel have undergone renewed training, cleaning frequency has been increased and Hilton advises that disinfectants are “hospital grade”. Hand sanitisers have also now become commonplace on reception desks.

Of course, the hotelier’s worst nightmare is if a case of coronavirus is discovered in one of the guestrooms and the whole property is subsequently locked down. There is little doubt that they must be prepared to act swiftly, and I imagine in that case it would mean all of the guests and staff in-house would suffer the same fate as cruise line passengers.

Bouncing back

However, we must remain positive, and, like all of the great threats to the travel business that we have faced in the past 50 years, we will get over this one. Experience has shown that when the threat has been removed we recover relatively quickly.

Ten weeks is what it took when SARS was extinguished, and US travellers headed back to London in a similar time frame when the IRA ceased its bombing campaign in the nineties. It might be longer in the case of coronavirus because of countries retaining a quarantine period for travellers arising from certain areas, but, eventually, even this will pass.

Meanwhile, like many, I am self-isolating. I hope you have a plan of how to keep active, and stay in touch with those you love. And at this troubling time, please spare a thought for all of those who work in the hospitality business.

Derek Picot has been a hotelier for more than 30 years, and is author of Hotel Reservations.

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