Industry Update
Press Release30 April 2020

Benelux Hoteliers expect relatively quick recovery of local market, and slow recovery of international market

Horwath HTL Benelux Hotel Market Sentiment Survey

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Horwath HTL

Hoteliers in the Netherlands and Belgium expect that the corona crisis will have a long-term impact, but will eventually recover. This is shown in new research by Horwath HTL. The domestic market will recover relatively quickly and perhaps even come out of the fray more strongly, but the international market is facing a slow recovery. A large number of closed hotels are now cautiously opening again, but revenues in the first half of the year have been at least halved. The projections for the second half of the year also show much lower occupancies and revenues. After the crisis, which hoteliers expect to last for at least 6 to 12 months, a slow recovery is expected.

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Expected impact of the corona crisis

Positive

  • 5% expect an increase in the tourist individual segment in 2020
  • 12% even believe that the domestic market will emerge stronger
  • 67% expect recovery within six months and two years

Negative

  • 85% expect revenues to be much worse in 2020 than in 2019
  • 80% expect a greater impact than from the financial crisis 2008 - 2009
  • 72% expect tour groups to perform much worse than in 2019

Long-term impact of the corona crisis

The hoteliers expect the impact of the corona crisis to last longer than the current lockdown measures. More than 70% of hoteliers expect the impact to last longer than 6 months: 31% expect 6-12 months, 36% expect 12-24 months and 4% longer than 24 months.

The impact on the hotel market in 2020 is very large. Almost all hoteliers expect occupancy rates and revenues to be worse this year than last year; according to 85% they will be much worse. More than 80% of the hoteliers believe that the consequences of the corona crisis are considerably greater than the last financial crisis in 2008-2009.

Hotels are slowly reopening

Of the 200 hotels surveyed, almost 60% were completely closed by mid-April, and another 22% had closed part of the hotel rooms. In addition, only 16% are still operating the food and beverage and/ or other facilities. A number of hotels have since reopened, many expect to return to business in the coming month.

Bars and restaurants have been closed in Belgium since March 12 and in the Netherlands since March 15 by order of the government, but hotels may still remain open. In the Netherlands, hotel guests may also use the hotel restaurant under certain conditions. The measures will last until at least May 19 in the Netherlands and June 8 in Belgium.

Of the hotels that are closed, almost 80% expect to be closed for 1-3 months. Only 2% are expecting a 3-6 month closure; none of the hoteliers expect to be closed for more than 6 months. However, almost 20% indicate that they will remain closed until the end of the crisis.

Occupancy rates and revenues more than halved

More than 80% of the surveyed hotels expect a decrease of over 50% in the occupancy rate in the first half of 2020 compared to the same period in 2019. Average room rates have also fallen, but less sharply. More than 50% expect a decrease of over 25%, of which about 30% expect a decrease of over 50%. Almost all hotels expect revenues to fall by more than 50%.

A decline is also expected for the second half of 2020, but projections are - currently - less negative than in the first half. Approximately 97% expect lower occupancy rates in the second half of the year than in the same period last year, but only about 10% of hoteliers expect a decrease of over 50%. The majority, almost 52%, expect a drop between 25% and 50%. The projections for the average room rates are again slightly less negative: 91% expect a decrease, but only 30% expect a decrease of over 25%.

Largest impact on international market and tour groups

Hoteliers expect the greatest impact on the international market. Nearly 97% of respondents expect the international market to perform worse in 2020, of which 66% expect the market to perform much worse. Expectations for the domestic market are less negative, but more than 50% still expect a decline here.

None of the business and tourism market segments are expected to show an increase in 2020. For all segments, at least 90% of the hoteliers surveyed expect the segment to perform worse or much worse. The most negative impact is expected on the tour group segment: almost 72% expect this segment to do much worse. The business group segment will also perform much worse according to 67% of respondents, and the business individual segment according to 55%. The tourist individual segment is seen least negatively. Here 5% of hoteliers expect an actual increase.

In the longer term, expectations for the international segment are also the most negative, followed by the group segments. The domestic market has the most promising outlook: only 2% of respondents expect the domestic market will never recover from the corona crisis. The majority are cautiously optimistic about the domestic market: almost 50% expect a slow recovery, and 37% expect this market to return to its previous level soon. In fact, nearly 12% believe that the domestic market will be stronger after the corona crisis than it was before the crisis.

For the foreign market, 15% do not expect a full recovery, and 74% only a slow recovery. The remaining 11% do expect the foreign market to fully recover, but none of the respondents foresee an improvement compared to the market before the crisis.

Labour costs are main business concern

The Horwath HTL survey shows that over 80% of hoteliers are deeply concerned about labour costs, while between 30% and 40% are also concerned about energy costs, taxes, debt and interest payments and/ or lease payments. Most hoteliers therefore hope for additional support from the government, including by reducing or suspending VAT and tourist tax and by providing financial support to hotel staff and the hotel market as a whole.

Many hoteliers have taken actions to increase turnover, including through additional sales & marketing activities (45%), by selling vouchers (36%) and by offering the hotel rooms as an office or quarantine room (33%). Hotels also focus on take-away and delivery services from the hotel restaurant, including private dining in hotel rooms.

However, some of the hoteliers choose not to initiate sales-oriented activities during the lockdown, because it seems inappropriate or because the hotel has halted all operations. There are also hotels that make the rooms available for healthcare institutions or as a homeless shelter.

To save costs, 68% of participating hotels have reduced the number of temporary staff. In addition, 37% of respondents reduced the number of permanent staff, while another 24% were considering the same. More than 42% of participating hotels have applied for a lease reduction from the hotel owner.

Horwath HTL Hotel Market Sentiment Survey

The Benelux Hotel Market Sentiment Survey 2020 is a publication by consulting firm Horwath HTL. The report presents the results of an online survey within the hotel industry in the Netherlands, Belgium and Luxembourg in the first half of April 2020. Some 200 hotels in the Benelux participated in the survey.

About Horwath HTL

Horwath HTL is the world"s largest hospitality consulting brand with 45 offices across the world providing expert local knowledge. Since 1915 we have been providing impartial, specialist advice to our clients and are recognized as the founders of the Uniform System of Accounts which subsequently has become the industry standard for hospitality accounting. We focus one hundred percent on hotels, tourism and leisure consulting and have successfully completed over 16,000 projects.  If you have any questions, please contact James Chappell, Global Business Director at [email protected].

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Marco C. van Bruggen
HORWATH HTL
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