Industry Update
External Article28 January 2021

So You Want to Open a Hotel? Now?

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nytimes.com external

Before the pandemic began, the second location of The June Motel, a 24-room boutique hotel in Sauble Beach, Ontario, was set to open late last spring. To be fully ramped up for Lake Huron's 2020 beach season was the goal.

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Construction stopped in mid-April, however, leaving the property's restaurant with half-installed floor tiles and guest rooms that hadn't yet been coated in cheery blush-colored paint. April Brown and Sarah Sklash, the June's co-owners, weighed three scenarios: not open at all; open as a rooms-for-rent Airbnb model without amenities; or push the opening until Labor Day.

"A lot of it came down to: Can we financially wait three months to open?" Ms. Brown said of their decision to delay. "The reason we were able to do that is that we got a lot of subsidies. We got grants; we kept several employees on payroll. There was a lot of support from the Canadian government for the tourism and hospitality sector."

Over the past decade, tourism destinations around the world saw record hotel development. In 2019 alone, a global construction binge increased the number of hotel rooms by 8 percent compared to the year before. But in 2020 — and, now, 2021 — the lodging industry has faced almost unbelievable challenges: increasingly complicated restrictions on domestic and international travel, virus safety protocols that require resources and training, and strict testing mandates and quarantine requirements for travelers.

Which leads any rational person to wonder: Is it wise to open a new hotel during a pandemic? According to a recent report by Lodging Econometrics, which tracks the lodging industry, more than 900 hotels opened in the United States last year — more than 100,000 new rooms. This year, another 960 new hotels are expected to open.

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