79pc owners opt for partial or total closure

How Hotel Owners with Existing Hotels are Responding to the COVID-19 Pandemic (MENA Hotel Market Sentiment, 2020: Colliers International Survey)

Following the spread of COVID-19 and subsequent travel bans impacting international travel, Colliers International found that 79 per cent of Mena hotel owners have decided to partially or fully close their hotels due to low occupancy rates.

This, along with other insights about the region’s hospitality industry and current market sentiment from Colliers, was shared at the recently concluded AHIC Webinar, where senior represented from MEED and STR also spoke.

COVID-19 is having an enormous impact on the world economy, with the travel and tourism sector being the hardest hit by the fall-out from the pandemic. As governments continue to introduce measures to slow the spread of the virus and promote safeguarding measures, hotel owners are also taking precautions as travel comes to a halt.

Colliers International surveyed hotel investors in the Middle East and North Africa to get their perspective on the current situation, how they have responded to the pandemic and their thoughts on the market moving forward. Survey participants are from more than 25 cities, in Saudi Arabia, United Arab Emirates and Egypt. Also, 65 per cent of participants own operational hotels. Others have hotels under development.

Collier’s recent survey, which delves into the true impact of COVID-19 on the industry, found that while 79 per cent of hotel owners are looking at closing their properties at least partially, some properties are being used for quarantine and healthcare related purposes. Nearly 29 per cent of respondents with operational hotels have seen this within their properties.

Hotel owners with existing hotels are chiefly relying on salary reduction and/or layoffs (88 per cent), forced staff leaves (83 per cent), and full or partial closure of hotels (79 per cent) to get through the current situation. Operators have been very cooperative, was the most prevalent response among existing hotel owners.

“When it comes to owners with hotels under construction or with development plans underway, we found that 65 per cent have no plans to scale back. However, 35 per cent of respondents have reservations about proceeding with development plans,” said the MENA Hotel Market Sentiment, 2020: Colliers International Survey.

Hotel occupancy for 2020 is expected to be severely affected as illustrated by the approximate 30 per cent drop in occupancy in the MEA region seen in March of this year, as reported by STR. Colliers research revealed that 39 per cent of investors believe that the occupancy for the full year 2020 will be between 21 to 40 per cent, while 33 per cent believe that the occupancy will be between 41 to 60 per cent, with regards to their respective markets. Most hotel investors remain hopeful for a relatively quick recovery period. 46 per cent of respondents expect the recovery to begin in Q4 2020.

Majority of respondents expect the market to take about 6-12 months from the start of recovery for the hotel market to return to 2019 occupancy levels, while 22 per cent of respondents expect the recovery to take somewhere between 12 to 24 months.

The majority of hotel owners and investors have a positive outlook on the future of the hospitality industry. Overall, 52 per cent of respondents expect to see development opportunities in the medium term. 39 per cent would like to focus on refurbishment and property upgrades, 26 per cent on acquisitions and 22per cent on restructuring. Only 7 per cent of the respondents stated that they do not see any opportunities in the medium term.

When it comes to expected changes to the industry in the long term, over a quarter of the respondents (26 per cent) believe that the market will get back to “business as usual”, while the vast majority (74 per cent) agree that the industry must be better prepared in the future for a similar type of event by implementing better crisis management planning.

In late March, Bench Events announced that Arabian Hotel Investment Conference (AHIC) 2020 would be delayed to 21-22 September 2020 in light of the COVID-19 lockdown. The event will be held at the Madinat Jumeirah in Dubai.