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Recovery May Be Slow

By Dennis Nessler | May 5, 2020

By Dennis Nessler

While hotel companies are clearly gearing up for what they hope will be a significant increase in business in the coming months as businesses slowly reopen throughout the U.S., most acknowledge they don’t expect a ‘return to normal’ for quite some time.

That was the consensus among a group of executives from major hotel operators during last week’s Hotel Community Forum virtual roundtable entitled “How Hotels Can Recover From COVID-19.” (The event will be available for viewing on May 14 at 2:00 p.m.)

Robert Cole, president & CEO, Atlanta, GA-based Hospitality Ventures Management Group—which operates more than 40 properties—noted he expects leisure markets to ramp up first. However, he did add it’s “anyone’s guess” as to when that happens.

“We believe that May is going to look very similar to April, generally speaking. June will probably see a slight tick-up in occupancy and then slowly ramping up July and August,” he said.

Cole added, “We’re being very conservative in our projections. We believe we’re in for at least an 18-month minimum time period before we’re going to start approaching anywhere near 2019 overall RevPAR.”

Kerry Ranson, chief development officer, Alpharetta, GA-based HP Hotels—which manages nearly 30 hotels—reinforced the point noting that forecasting will be extremely difficult.

“I think looking forward it’s 18-24 months but I think it’s probably more of an EKG over that time frame; it will be up and down. We’ll have some months and weeks that probably look great and as you turn around and come out of a great week you’ll have the bottom completely fall out,” he said.

Chris Green, COO, Greenbelt, MD-based Chesapeake Hospitality—which has a third-party management portfolio of nearly 30 hotels—maintained that full-service hotels will likely take longer to recover than their limited-service counterparts.

But regardless of segment, Green has tempered his expectations. “I feel like it [a recovery] is going to be slow. In our analysis department we ran the China model coming out of the bottom of the trough here and it only really gets you to 38 to 40 percent occupancy in December. That’s after doing 75 percent in January and February. The rest of the year is going to be very weak compared to what we’re used to doing,” he said.

Daniel del Olmo, president of Denver-based Sage Hotel Management, a division of Sage Hospitality Group—which manages more than 50 hotels—agreed and detailed the company’s potential approach.

“This is going to be a very slow, somewhat painful process to reopen. We have started [revised] forecasts with all of our team to really determine when the right time is for properties to open. In some cases where we have several properties in one market we may just take a sequenced approach and open one property before we turn on the entire market overall,” he said.

Meanwhile, Brad Rahinsky, president and CEO, Atlanta-based Hotel Equities—an owner, developer and operator with a portfolio of more than 140 properties—expressed a bit of optimism hoping for “an uptick in June” and beyond.

“We think the leisure transient business will hopefully start to have some consumer confidence as summer approaches and there continues to be a flattening of the curve. There are some small glimmers of hope. We like what we’re seeing 30, 60, 90 days out versus where we were as recently as 30 days ago,” he said.

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