The hotel industry, like all others in the travel space, is facing an unprecedented crisis – a truth that’s starting to show teeth as companies release financial reports for the first quarter. But there are signs of hope that the industry will recover quicker than its chief peers: airlines and cruise lines.
“I feel spectacularly good about the long-term for the industry,” Hilton CEO Christopher Nassetta said on a conference call with analysts after the release of its first-quarter earnings. He said, however, that the industry needs time to rebuild, and that a full recovery could take several years to return to demand seen in 2019.
Based on prior economic recoveries, with some nuance, he sees a return to leisure, business then meeting travel as the pattern that will take place as the crisis fades.
Hilton CEO: ‘Travel at a virtual standstill’
Nassetta said that travel demand is at record lows, and operations are currently suspended at approximately 950, or 16%, of hotels around the world. This is about 10% of hotels in the Americas, 60% in Europe, the Middle East and Africa and 15% of hotels in the Asia-Pacific region.
During the first quarter, revenue per available room fell 23%. In March alone, this figure dipped 57% as the virus spread across Europe and the U.S. “Overall, we do not think our first-quarter results provide clear insight into the current environment,” Nassetta said. Translation: It’s not going to be a pretty second quarter.
“With travel at a virtual standstill, we expect systemwide revPAR (revenue per available room) decline roughly 90% in April,” Nassetta said.
That said, travel is beginning to resume and economies are reopening. In China, nearly all 150 hotels that were closed due to the pandemic have since reopened. Occupancies reached more than 50% during the May Day holiday, up significantly from 9% in early February.