HI+

Easter egg with dynamite

9.4.2020

Dear Insiders,

The German hotel industry is currently losing approx. EUR 750 million in revenue with each passing week. Landlords and finance partners expect rents and annuities of at least EUR 500 million each month, and 250,000 employees are already on short-time working. The whole episode is becoming more intense, and even this week's improved credit terms are still not sufficient to stop larger hotel groups slipping through the cracks.

Hotel and real estate associations are trying ever more desperately to make it clear to politicians and banks: Beds lost in March cannot be occupied twice in June! If Berlin government fails to come up with further improvements to its support programmes, the sector will run headlong into mass insolvency. Experts estimate the risk of insolvency in the travel industry at 40%, more than twice as high as in the economy as a whole!

It’s for this reason that the pressure to relax restrictions is increasing in many countries. Some are already taking cautious first steps in that direction, including Denmark, Norway, Austria and Czechia.

Worries and concerns are apparent in all conversations: If the economy is not gradually opened back up from May onwards, the humanitarian disaster will be followed this year by economic ruin even in rich countries and social unrest everywhere.

The tension is palpable. Dealing with hotels closed in this crisis is more work than operating them during normal times, Duncan O'Rourke, COO Accor Central Europe, stated in our interview today. Even the European market leaders would be pleased to see occupancy grow again, at least in June. Duncan doesn't even want to think about RevPAR trends yet. Of the 3,000 Accor hotels in Europe, around 2,200 are currently closed.

It gets even more depressing today when the still great transaction figures for Germany in the 1st quarter are compared with forecasts for the 2nd quarter and the now looming crash. The figures from the market report recently published by the German International Hotel Association for 2019 should be framed in gold.

The virus has the entire world firmly in its grip, as our summary flight over the Middle East shows. The virus scenario is repeated in almost every country in the same way, only with a time lag. And just as uniform will be the trend that follows: First, it will be local restaurants, cafés, bars and shops to begin to generate revenue again, then domestic tourism will go through the roof, while the recovery in business travel will be significantly delayed. The latter is again dependent on air travel and open borders - and on the confidence that travellers must again have developed by then. Trust and confidence will be the economy’s driving force.

On Tuesday, I watched the first purely virtual live hotel conference "Hospitality tomorrow": Allegedly 5,300 people were registered, and in the discussions I listened to for five hours, an average of 2,500 participants were online at any one time. More about the content soon, but important to me now is the message from this event: Firstly, you can get things - and thoughts - moving online; secondly, it does exist - the global tourism spirit and the common fight against the virus! It felt good to see this.

Have a good Easter break, enjoy short walks and switch off from it all. We will do the same, our ordinary Easter break will be next week, so we will be back on Friday, 24 April, with our next edition. Hopefully with more positive news.

Yours, Maria Pütz-Willems
Editor-in-chief

Your opinion? maria[at]hospitalityInside.com

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