The impact of the pandemic and subsequent economic downturn has clearly been felt by all aspects of the industry and a diverse range of executives—ranging from owner/operators to brands and design firms—all offered updates during a recent panel expressing both concern and guarded optimism going forward.
The Southern Lodging Summit last week hosted a panel discussion entitled “Visionary Viewpoints” focused primarily on Crisis Leadership in the wake of the pandemic, while also addressing potential hotel loan default issues as well as the industry’s advocacy efforts.
Nimisha Patel, managing partner, Vue Hotels, provided the perspective of a San Antonio, TX-based owner/operator on the impact of the pandemic.
“We’re definitely living in historic times. The thing I think about the most and worry about is just survival. It’s a time of uncertainty. We have so many moving parts, we’re having to pivot in so many directions. I feel confident, but at the same time I feel a little conservative as well. You have to take that approach, especially as a business owner and a manager. And when you’re operating hotels you really just don’t know what’s going to happen,” she said.
Kristie Dickinson, EVP, CHMWarnick—which asset manages a portfolio of hotels and provides owner advisory services—stressed the importance of providing the proper guidance.
“I think at this particular juncture where forbearance periods are starting to come to an end, where we’re seeing no more reserves to tap into, and fee relief at various levels is starting to wane hotel owners are really faced with some of the biggest decisions. They need a clear strategy on how to weather the months ahead,” she noted.
Dickinson further noted, “I think everyone is really looking for positive trends to signal that travel may be slowly returning and I think we caught a little glimmer of that over the summer months with the leisure travel. The big question is really is that sustainable? Is leisure going to have a longer tail this fall absent any sort of meaningful return to corporate travel?” she asked.
John Koshivos, vp & managing director of development SE, Hilton, for his part, expressed a measure of optimism.
“As we progress through the next few months we’ve seen some stabilization in the market and we’ve seen some pick up in business. A lot of it has been on the leisure side of the equation. As we go forward we’re hoping to see, and we’re starting to see, some positive trends develop on the other side of the equation as well. If we can keep a second wave [of the Coronavirus] from not becoming a big issue for us in the industry I see a positive light at the end of tunnel as we move into 2021 and beyond,” he said.
Suzie Hall, founder/president, Cornerstone Design, pointed out the company is taking time to further review material specifications in the wake of new cleaning protocols and provide additional options.
“We’re informing our owners and educating them. That’s where our dozens of LEED and health care projects informs the design bringing those to the table so that we can have intelligent conversations and help them to make the right decisions. What we’re finding through our work is that we’re able to obtain even better priced alternatives, say to some of the brand standards. We’re not trying to move those out of the way, but we’re just trying to bring forward some of the better solutions to our owners right now in the midst of pandemic,” she commented.
From a procurement perspective, Hall also stressed the importance of not changing specifications within a project.
“It is so important now, especially with moisture barriers, green guard certification, indoor air quality. These are all things that have been important, but they’re even more important in today’s landscape so that the travelers do feel safe and they feel well taken care of,” she noted.
Meanwhile, with an increasing number of hotels struggling to make their debt payments, particularly when it comes to CMBS loans, there has been plenty of industry speculation for a wave of property foreclosures in the offing.
“I can speak to reports that we’re hearing of this pending tsunami. I think it’s reported that there’s never been a higher default rate for hotels within the CMBS category ever, so I think something’s going to happen,” stated Dickinson.
“Some of it might start happening here in the fourth quarter; there’s a little bit of that going on right now. The question is going to be when these assets go back to the master servicer—or when an asset is going to be taken over by another party—how is it being valued and is there going to be a gap in what the value of that hotel is versus what equity is remaining in that hotel or what the owner might have to put back into the asset? There’s going to be a lot of back and forth going on,” said Koshivos.
Patel concluded by offering some insight on how local, state and national governments have responded to the lodging industry, and in particular requests for additional relief.
“I think that as a whole from the beginning things were slow to progress. It would have been helpful for us to have some of this PPP money and loan money come out and I think that that could have really set some owners and companies in a better financial position going forward,” she noted.
Patel added, “I’m optimistic and I wouldn’t say I’m completely satisfied but I do think that the government is listening on every level and I think it’s because of the engagement that we have provided and just really letting them know we’re going to need the help in order to survive.”