Comment: Crisis management from adaptation to new business kick off strategies

Comment: Crisis management from adaptation to new business kick off strategies

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COVID-19 is having an enormous impact on the world economy, with the travel and tourism sector being the hardest hit by the fall-out from the pandemic. As governments continue to introduce measures to slow the spread of the virus and promote safeguarding measures, hotel owners are also taking precautions as travel comes to a halt.

Colliers International surveyed hotel investors in the Middle East and North Africa to get their perspective on the current situation and their thoughts on the market moving forward.

According to the survey, 79 percent of hotel owners have decided to partially or fully close their hotels due to low occupancy rates. Some properties in the region are being used for quarantine and healthcare related purposes. Nearly 29 percent of respondents with operational hotels have seen this within their properties. Many hotel owners are being obliged to: reduce the salaries of their employees, lay off some staff members while forcing others to take leaves. 

When it comes to owners with hotels under construction or with development plans underway, we found that 65 percent have no plans to scale back. However, 35 percent of respondents have reservations about proceeding with development plans.

Hotel occupancy for 2020 is expected to be severely affected as illustrated by the approximate 30 percent drop in occupancy in the MEA region seen in March of this year, as reported by STR. Our research revealed that 39 percent of investors believe that the occupancy for the full year 2020 will be between 21-40 percent, while 33 percent believe that the occupancy will be between 41-60 percent, with regards to their respective markets.

Christopher Lund

“Hotel crisis management is a balancing act. For hotels that are closed, there is a lot of work going on in the background to limit expenses, manage the staff, cash flow and hotel building while preparing for a reopening. For hotels that are partially operational, crisis management is about adapting to a new way of operating hotels; by adopting contact-less service such as communicating through apps or introducing self-check-in; and by reducing the food menu to adapt to a lower volume of guests,” Christopher Lund, head of hotels, MENA region at Colliers told HN. 

The majority of hotel owners and investors have a positive outlook on the future of the hospitality industry. Overall, 52 percent of respondents expect to see development opportunities in the medium term. 39 percent would like to focus on refurbishment and property upgrades, 26 percent on acquisitions and 22 percent  on restructuring. Only 7 percent of the respondents stated that they do not see any opportunities in the medium term.

When it comes to expected changes to the industry in the long term, over a quarter of the respondents (26 percent ) believe that the market will get back to “business as usual”, while the vast majority (74 percent ) agree that the industry must be better prepared in the future for a similar type of event by implementing better crisis management planning.

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