Multi-Year Recovery Along with New Opportunities for the Travel and Hospitality Sector, Predicts HVS Global Leadership
DENVER, CO - HVS senior management across the globe hosted a webinar on September 8, 2020, to offer expert perspectives on key hospitality topics including how the COVID-19 pandemic has affected their respective regions and the kind of recovery hoteliers can anticipate, as well as the long-term changes the sector is likely to experience.
Opened by CEO Stephen Rushmore and moderated by HVS London Chairman Russell Kett, the webinar also included a straw poll, in which 51% of the over 1,800 global participants said they expected RevPAR (rooms revenue per available room) to return to pre-COVID-19 levels during 2023, with a further 23% anticipating a return in 2024.
In addition, 35% of the audience expected hotel values to return to 2019 levels in 2023, with 28% estimating a return in 2024. Getting corporate and group business back emerged as the single most important issue for 37% of the audience, with 29% most concerned about when international visitors will return. And, considering the current hospitality environment, participants demonstrated an optimistic investment approach, with 45% preferring a "hold and buy" strategy.
Based on their extensive in-market experience, regional variations for the hospitality sector were voiced by the HVS global leadership team during the hour-long webinar.
Charles Human, HVS President Europe, predicted a stop-start recovery, largely due to ongoing local lockdowns and the further imposition of travel restrictions. "We expect regional commercial markets such as Germany to start to pick up initially, but gateway cities will be the next challenge. London is a shadow of its former self at the moment," he said.
Hala Matar Choufany, HVS President Middle East & Africa, commented, "Perhaps the good news is that Africa has the potential to recover ahead of the Middle East, although it is very dependent on the international market. Its recovery will be tied to air traffic and connectivity, whereas in the Middle East, few cities have diversified their segmentation, so they are heavily dependent on the corporate sector with limited domestic demand."
Hok Yean Chee, HVS President Asia Pacific, anticipated a slow 2021, with recovery in 2022/23 and RevPAR levels returning to 2018/19 levels in 2024. Similarly, Mandeep Lamba, HVS President of South Asia, said occupancies across India were likely to return in Q3 2022 and RevPAR in Q2 2023. "It's going to be leisure and mid-market hotels that will lead the recovery here. Our knight in shining armor in India is going to be the domestic traveler, and everyone is going to start focusing on them like they have never done in the past," he said.
Rod Clough, HVS President of the Americas, was more upbeat, expecting recovery in 2021 and into the spring of 2022, resulting from an increase in travel demand. "While we have a couple of difficult quarters ahead, we expect a strong return of demand next summer and a recovery period that will extend through 2023. In the U.S., people want to be traveling to events/conventions and meeting colleagues. As a society, travel is in our DNA, and the desire for travel is strengthening," he stated.
While the recovery is anticipated to take several years across the world, the panel discussed a continuation of global hotel development. Explained Rod Clough, "We are an industry that develops hotels in both good and challenging times. We still need new hotels in new neighborhoods and in emerging destinations. The train has slowed, but it's still moving forward."
Hok Yean Chee also anticipated hotel development would continue in China, although costs were likely to rise due to the need for a different design, with social distancing becoming a new consideration. "In China and Indonesia, there is a lot of domestic travel prompting demand for more hotels," she commented.
Charles Human was more circumspect. "Land prices [in Europe] will fall, which is a help, but that's not enough to entice developers. Those [projects] under construction will continue, but the pipelines are too big in some areas, so a slowdown won't be such a bad thing," he said.
Hala Matar Choufany said she expected development in her region to continue, but that it would take a different shape as developers assess supply and demand. Discussing the changing nature of corporate and MICE (meetings, incentives, conferences, and events) travel, she said, "There will always be an element of face-to-face corporate travel, but things will change—we have to accept that and quantify it. There is no way we will go back to the old days of corporate and MICE travel, particularly as corporations now have limited budgets for it. Hoteliers will potentially identify new segments that will compensate for the loss in corporate business." She added, "When we travel less for work, we will travel more for leisure."
Charles Human was more bullish about the return of corporate travel. "Zoom works in pandemic times but not in normal times," he said. "Sometimes remote meetings can be very unsatisfactory. I do believe there will be new opportunities for hotels, particularly in the restaurant space with so many independent restaurants closing. The sector is heading for change, and operators will need to adapt to the new world."
Rod Clough in the U.S. ended on a positive note. He expects new sectors to emerge as a result of the current environment. "There will be small meetings to facilitate personal interaction, and hotels are a beacon for this. We will move into a new world. The hotel industry is made up of innovators; the industry may look different, but it will emerge innovative and vibrant," he said.
HVS is the world's leading consulting and valuation services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Established in 1980, the company performs more than 4,500 assignments per year for virtually every major industry participant. HVS principals are regarded as the leading professionals in their respective regions of the globe. Through a worldwide network of over 50 offices staffed by 300 experienced industry professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. For further information regarding our expertise and specifics about our services, please visit www.hvs.com.