A hotel’s recovery path from the coronavirus downturn in travel will hedge partially on which country the property is located.
“I think the government support, especially for small business owners, is absolutely fundamental,” he added. “I think they’re only able to stay open because they’re able to pass a substantial cost on to the government.”
Hoteliers able to access funds through the Paycheck Protection Program under the $2 trillion coronavirus relief fund are in a better position to weather the downturn in travel. Branded hotels that typically need between a 30 and 40 percent occupancy rate to break even on operational costs and debt service obligations could lower the breakeven threshold to between 6 and 15 percent with PPP funds that largely cover payroll expenses, according to the Bernstein report. There are still industry calls for further government relief due to a limited number of operators being able to access the funds.
While PPP loans help hoteliers keep properties open in the U.S., government assistance programs elsewhere in the world still offer a boost to the travel industry.
The UK government granted retail and hospitality companies a 12-month business rates, a commercial property tax holiday, and access to about $407 million in loans. France offered some corporate income tax deferrals. Chinese cities are offering travel vouchers and subsidizing hotels to offer special room rates, according to a Horwath HTL report.
Citing STR data on 2021 supply forecasts, Bernstein estimates 2 percent of all hotels will permanently close as a result of the crisis. The figure may seem low given how the hotel industry hit single-digit occupancy rates in many markets and averaged a 2 percent loss in March — with April performance expected to fare even worse. But central government and lender assistance and flexibility around the world is expected to keep supply largely intact into recovery.
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