The boutique hotel sector was expected to make a strong rebound “when consumers feel confident”, according to Horwath HTL.
The company said that, long term, it expected hotels to continue to be a strong asset class, “not least of which because the alternatives specifically retail and commercial office space will continue to be under pressure post pandemic as consumers and businesses have fundamentally changed how they shop and whether or not they need to be in an office”.
The company went to its 50 offices and asked them whether hotels were open, how ready their markets were for any kind of recovery and when did they expect that recovery to really pick up pace?
James Chappell, global business director, Horwath HTL, told us: “For the EMEA markets, there is a very clear north south divide as expected. For those markets in southern Europe who are very much dependent on a May to September season they have clearly struggled to generate that demand. Some of those markets like Greece and Turkey which are harder to get to and have far less domestic demand have really struggled.
“Other markets like Spain and Portugal came out of the blocks pretty strongly, too strongly as it turned out because changing restrictions over the summer have meant that it was impossible to generate any kind of momentum. We think that northern markets in Europe have fared much better, simply because those markets are far more accessible by car and has made domestic staycation in a far more viable option. This of course has not fed into cities, which people are avoiding, but outside of those cities rentals, campsites and other forms of hospitality have clearly been experiencing very high volumes of demand. This of course is a relatively short season, but has meant that 2020 has not been a complete write-off.”
Looking at how ready markets were for recovery, Chappell said: “With the glaring exception of China, it would seem that most of our colleagues do not have a tremendous amount of confidence with their local governmental leadership in terms of effective testing and more importantly any kind of consistent rules and regulations with regards to where you can fly to, where you have to self isolate upon return et cetera et cetera.
“I think one of the huge challenges the industry has faced has been this movable feast element of which markets are okay and which are not. There were a couple of instances fairly early on in the summer when the rules changed almost overnight, guests were stranded or at least forced to pay exorbitant rates to get home to avoid self isolation and this had a knock-on effect in terms of booking confidence for sure. One could also look at markets that clearly reopened too early.
“We think it's absolutely clear that some markets had very clear plans for reopening which went out the window when they could see their summer trading vanishing before their eyes, they rolled the dice and were caught out. Of course nobody is pretending that anything about this forest is straightforward, but somethings also blatantly obvious that they could've been foreseen and planned for. On a positive note one could say that the only way is up and then at some stage governments will learn from their mistakes.”
Looking ahead, Chappell said: “As we are now halfway through September, 2021 is not looking promising, certainly not to get back to any semblance of normality. The exception to this of course is China and our colleagues in Latin America feel that they will be back to 2019 levels next year, although that probably says more about how those markets were in 2019.
“We think best case scenario, Q1 of 2021 will probably continue to be very challenging, but all things being equal with the possibility of a vaccine and a second wave that is managed more effectively than the first would hopefully mean that by the summer of 2021 things would certainly be moving in the right direction. This of course will still probably mean that we are looking at no more than six months of good trading which would lead us to believe that 2022 will be the year when we see a proper recovery and markets returning to, if not levels of 2019, then certainly the levels that would show the market is viable and on the right track.
“On a positive note, we feel very strongly that the demand for travel and tourism is still incredibly high and when consumers feel confident we expect the rebound to be incredibly strong.”
Insight: As this was being released, the UK government was busy mulling a ‘circuit breaker’ lockdown, which would involve not going to the pub, but going to work and school, which would seem to put Jack at risk of being a dull boy, as the saying goes.
But of course dull is perfectly acceptable if it prevents the spread of the virus, one merely questions how, with UK schoolchildren in bubbles of 120, this is to be effective. Away from the UK and other jurisdictions are struggling with the same choices and will continue to do so throughout the winter. One mooted theory is a total lockdown but for a limited about of time, say, 14 days.
This would be less wearying on the psyche, hopefully effective, but once again devastating to the hospitality sector, without the proper support. For while another lockdown would certainly create that pent-up demand which could help fuel a rapid recovery, if the hotels and guests have gone bust in the meantime, it will be a poorer world once the doors reopen.