The 75% occupancy limit does not mean working at full capacity, but the recovery of the hotel market is driven by the return of holiday travel and stronger demand for hospitality services. Although the industry is facing a number of challenges, hotel owners hold onto their assets, they are reluctant to sell at a discount, believing that business will return to pre-pandemic levels.
Appetite for holiday trips
People are exhausted by the effects of the pandemic; they want their freedom back. Vaccinations have instigated a slow return to a new 'normality', and staying at a hotel is a big part of that process,
says Agata Janda, Head of Hotel Advisory, JLL.
'New normal' and new challenges
Although people are returning to hotels located in typical holiday destinations and resorts, city hotels are still waiting for business travellers. Since the outset of the pandemic, many companies have banned or restricted travel resulting in limited number of business stays at hotels as well as the disappearance of conference & events business. Limited international travel has also had a negative impact on weekend breaks activity across major city destinations in Poland such as Krakow, popular for British tourists, and Gdansk, which is popular for Scandinavians. Currently, the majority of hotel guests are domestic,
comments Agata Janda.
A change of lifestyle, expectations and habits
Undoubtedly, the COVID-19 pandemic has triggered changes in some hotel trends. These include a surge of the so called 'bleisure' reservations that combine tourist and business stays. This is a natural consequence of the blurring of the boundaries between life, work and travel and a greater popularity of the hybrid work model,
explains Agata Janda.
Cities are home to hundreds of thousands of people, who can become hotel customers if the hotel offers inspiring, stimulating spaces: great restaurants, cool bars, relaxed coffee shops, etc. Residents of the city can represent a significant new revenue stream for hotels. In most popular lifestyle hotels, food & beverage sales produce nearly a half of the total hotel revenue and the evidence suggests that as much as 75% of this income can be generated by external guests,
adds Agata Janda.
Corporate responsibility and sustainability
Owners stick to prices
Although there is capital looking to acquire hotel properties, there has been only one significant hotel transaction this year. This is largely due to mismatch in pricing between sellers and buyers. Opportunistic investors want to mitigate the risk associated with operating in an uncertain hotel market and expect discounted prices as a consequence. Hotel owners, on the other hand, value their assets mainly on the future operational potential once the business returns to full ‘normality’, However, this doesn’t necessarily mean that there are no ongoing negotiations that could end up with successful closure in the foreseeable future,
says Jakub Kleban, Senior Director, Valuations, JLL.
Although the industry is adapting to the new market realities, it may take 2-3 years for hotel trade to fully recover. It is optimistic to see revenge demand, but it is hard to expect two months of holidays to revive the industry after a long period of shutdown. Some losses can never be recovered. However, on a positive note, the hotel sector is likely to be the quickest to recover As soon as it is safe to travel for all, we will see airports, train stations and hotels filling up,
concludes Agata Janda.
