#Coronavirus: no return to normal before 2022 at best in the hotel industry

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Hotels at a standstill since mid-March but also travel restrictions and lack of tourists: the hotel industry was one of the first sectors immediately affected by the Covid-19 crisis. From small hotels to luxury hotels, it is the hotel industry as a whole that is helplessly witnessing the collapse of its economy. According to the statistical research group STR and the specialist firm In Extenso, it is not expected to return to its 2019 level of activity until 2022 at best. Analysis with economic outlook.

 

In a videoconference held at the start of April, the STR group and the In Extenso firm, a hotel industry expert duo, have presented a joint study on the impact of Covid-19 on the hotel sector in France and Europe. They were thus able to report on the current situation and deliver their forecasts for the future, between concerns and uncertainties.

 

Hotel business and turnover in free fall

 

This duo of specialists delivered a very pessimistic overview of the French and European hotel industry: current activity has been reduced to almost zero due to the impact of the pandemic and the results show a “drastic” drop in occupancy rates: – 96% in Hungary, – 87% in Spain, – 86% in Italy, and – 75% in France.

 

Same dark scenario for revenue per available room – the indicator of hotel owners’ operating profitability – which fell by 61.1% in Europe on March 29. According to the STR statistical research group, the average drop in unit revenue per available room was particularly pronounced in European cities: a 75% decline was observed in Paris in March and 86% in Rome.

 

As a result, the STR-In Extenso study does not expect a real recovery in the hotel sector for several years. According to the study, the recovery will only really take shape from 2021 for hoteliers and it would even take at least another year to return to the pre-crisis market.

 

The recovery is expected in Europe by 2021. The return to 2019 results will occur in 2022. It will take three to four years to return to a pre-crisis situation” said Aoife Roche, STR’s Europe-Middle East-Africa customer account manager.

 

A return to the previous level before 18 months is very unlikely“, confirmed Olivier Petit, partner in the “Tourism, Culture & Hotels” division of In Extenso. “We are in the best case scenario with a return to the situation of 2019 in 2022. The experience of previous crises has shown us that it takes 24 to 36 months to return to a previous situation. But the current crisis is much more brutal“, he said.

 

And even if China is showing its first signs of recovery, with hotel occupancy rates rising since the reopening of certain establishments, Olivier Petit remains alarmist: “We can get the flow going again quickly. (…) But rates are falling and it will take six months to restore them“.

 

A hopeful outlook for budget hotels

 

While the recovery of air traffic and the revival of tourism are not expected for tomorrow, palaces and luxury establishments, whose clientele is mainly foreign, are most likely to suffer the most. “The Americans are not going to come back to France right away,” is warning Olivier Petit of the firm In Extenso.

 

Moreover, the market for seminars, congresses and other events is not going to restart right away in 4 and 5-star hotels, according to the two specialists.

 

On the contrary, they believe that the recovery of the hotel industry in France, as everywhere in Europe, will in the future be driven by domestic demand and will primarily benefit the budget hotel industry.

 

Indeed, in a crisis context, demand is always more local, or at least regional, as travellers favour proximity for their leisure and tourist stays, for safety reasons.

 

Independent, franchised budget hotels that are “well positioned” geographically in France (by the sea, in the countryside, in the mountains) could then benefit from an accelerated recovery of their activities: the budget segment will start up again “faster” than the others, assures Olivier Petit.

 

A glimmer of hope for national economies. In France, if the end of the crisis takes place before summertime, Olivier Petit sees a summer season that could be “a good support for the French hotel industry, even in the absence of foreign customers“.

 

Thus, if the date of 11 May is already ruled out for a resumption of activity, and if the drop in activity both in France and abroad is estimated to be much greater than at the time of the 2008-2009 crisis according to the two experts, hotel owners continue to aspire to a gradual recovery, for the sake of the future.

 

Thus, although the date of 11 May has already been ruled out for an upturn in business, and the drop in activity both in France and abroad is estimated to be much greater than at the time of the 2008-2009 crisis according to the two experts, hotel owners continue to aspire to a gradual recovery, to halt the loss of revenue and avoid bankruptcies.

 

This is already the case for the Accor group, which has partnered with the world leader in inspection, certification and laboratory testing, Bureau Veritas, to define new health standards and reassure its hotels about hygienic practices.

 

Faced with an invisible enemy and gloomy predictions, hotels are reinventing themselves to relaunch their activities, regain new momentum and ensure their long-term future.

 

Read also > French hotel industry: the devastating impact of coronavirus.

 

Featured Photo : © Four Seasons Hotel George V Paris[/vc_column_text][/vc_column][/vc_row][vc_row njt-role=”not-logged-in”][vc_column][vc_column_text]

Hotels at a standstill since mid-March but also travel restrictions and lack of tourists: the hotel industry was one of the first sectors immediately affected by the Covid-19 crisis. From small hotels to luxury hotels, it is the hotel industry as a whole that is helplessly witnessing the collapse of its economy. According to the statistical research group STR and the specialist firm In Extenso, it is not expected to return to its 2019 level of activity until 2022 at best. Analysis with economic outlook.

 

In a videoconference held at the start of April, the STR group and the In Extenso firm, a hotel industry expert duo, have presented a joint study on the impact of Covid-19 on the hotel sector in France and Europe. They were thus able to report on the current situation and deliver their forecasts for the future, between concerns and uncertainties.[/vc_column_text][vc_cta h2=”This article is for subscribers only.” h2_font_container=”font_size:16″ h2_use_theme_fonts=”yes” h4=”Subscribe now!” h4_font_container=”font_size:32|line_height:bas” h4_use_theme_fonts=”yes” txt_align=”center” color=”black” add_button=”right” btn_title=”I SUBSCRIBE!” btn_color=”danger” btn_size=”lg” btn_align=”center” use_custom_fonts_h2=”true” use_custom_fonts_h4=”true” btn_button_block=”true” btn_custom_onclick=”true”]Unlimited access to all the articles and live a new reading experience, preview contents, exclusive newsletters…

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Hotels at a standstill since mid-March but also travel restrictions and lack of tourists: the hotel industry was one of the first sectors immediately affected by the Covid-19 crisis. From small hotels to luxury hotels, it is the hotel industry as a whole that is helplessly witnessing the collapse of its economy. According to the statistical research group STR and the specialist firm In Extenso, it is not expected to return to its 2019 level of activity until 2022 at best. Analysis with economic outlook.

 

In a videoconference held at the start of April, the STR group and the In Extenso firm, a hotel industry expert duo, have presented a joint study on the impact of Covid-19 on the hotel sector in France and Europe. They were thus able to report on the current situation and deliver their forecasts for the future, between concerns and uncertainties.[/vc_column_text][vc_cta h2=”This article is for subscribers only.” h2_font_container=”font_size:16″ h2_use_theme_fonts=”yes” h4=”Subscribe now!” h4_font_container=”font_size:32|line_height:bas” h4_use_theme_fonts=”yes” txt_align=”center” color=”black” add_button=”right” btn_title=”I SUBSCRIBE!” btn_color=”danger” btn_size=”lg” btn_align=”center” use_custom_fonts_h2=”true” use_custom_fonts_h4=”true” btn_button_block=”true” btn_custom_onclick=”true”]Unlimited access to all the articles and live a new reading experience, preview contents, exclusive newsletters…

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[/vc_cta][vc_column_text]Featured Photo : © Four Seasons Hotel George V Paris[/vc_column_text][/vc_column][/vc_row]

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Thanks to its extensive knowledge of these sectors, the Luxus + editorial team deciphers for its readers the main economic and technological stakes in fashion, watchmaking, jewelry, gastronomy, perfumes and cosmetics, hotels, and prestigious real estate.

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