It goes without saying, but all of us have been impacted in some way by Covid-19. The medical toll has been staggering, with over 24 million cases and more than 400,000 deaths in the United States. Even if you personally haven’t been infected, there is a good chance that you know someone that has.
Not only that, the economic consequences have been the most consequential since the Great Depression. According to one study by USC researchers, the United States stands to lose $3 to $4 trillion in GDP over the next two years. The precise number will depend on things like the length of government lockdowns, the extent of pent-up consumer demand, and ongoing infection rates and fatalities.
All of that said, the economic disruption hasn’t been equally distributed. Some sectors, like the technology sector, have thrived amidst Covid-19. But there have been others—most notably in the travel and tourism space—that have suffered immensely.
In this post, we want to discuss how hoteliers have been navigating all of the uncertainty imposed by Covid-19. While hotels have borne much of the brunt of this economic dislocation, there are opportunities for hoteliers to escape serious financial predicaments.
A Shock Unlike Any Other
Covid-19 has been unlike any other shock we have seen in our lifetimes. While hotel bookings experienced a significant disruption after the September 11, 2001 attacks, the entire country didn’t experience massive lockdowns or shutdowns.
One of the starkest data points comes from Koddi, which is a travel advertising technology company. Koddi data shows U.S. hotel searches in 2020. As you can see, as new cases rose, hotel searches fell off of a cliff.
Everyone from global mega-hotels like Hilton to the smallest hotels or motels have been hit hard. Looking at Hilton, for instance, RevPAR (which stands for revenue per available room), fell 81% in the second quarter of 2020. Hilton responded by furloughing employees, closing hotels, and borrowing money to stay afloat.
For smaller hoteliers, however, there weren’t as many options to ride out the worst of the storm. Even if some hotels were deemed to be essential businesses, a lack of travelers and community shutdowns have created steep odds for all small and medium-sized hotels. Moreover, these hoteliers don’t have as many financing options as the Hiltons and Marriotts of the world. While they could rely on funds from the Small Business Administration (specifically, the Paycheck Protection Program), these hoteliers scrambled to keep their lights on.
Ultimately, small and medium-sized hoteliers are looking for additional economic help to get through these difficult times. According to one survey by the American Hotel & Lodging Association, a stunning 71% of hotels will not survive for another six months without some sort of relief. 77% of hotels also forecast that without more funding, they will need to lay off more workers.
A Way to Move Forward
Clearly, times are tough for hoteliers. While the global distribution of the Covid-19 vaccine means that there is light at the end of the tunnel, it’s unclear when we will actually exit that tunnel. As we are waiting for normalcy to return, small and medium-sized hoteliers need to pay their bills. There is no guarantee they will make it through these uncertain times.
The financial pressures can be immense. Because of this, some hoteliers may want to leave the business entirely. However, those hoteliers that want to sell their businesses need to keep their intentions discreet. If word gets out that they are looking to sell, they likely won’t be able to get as high of a price as they’d expect.
So how can hoteliers avoid this predicament? Ultimately, they can work with commercial real estate brokers.
Commercial real estate brokers can source inquiries without making their intentions public. Not only that, but commercial real estate brokers can rely on their expansive network to find qualified leads. The process is quick, efficient, and personalized, thereby offering the most possible value to hoteliers.
Get Started Today
Times are tough for hoteliers. Covid-19 has been one of the biggest challenges in our lifetimes. That being said, hoteliers have options. For those hoteliers that are looking to exit the business entirely, a commercial real estate broker can be an excellent partner. He or she can help you achieve the financial outcome that you expect.
If you are interested in learning more about selling your hotel, don’t hesitate to contact me. I can help you find qualified buyers for your business.
