Is the current situation in the hotel industry unprecedented in its scale?
O. P. - Not only has this never happened before, but I never imagined that one day it would. We've already seen cycles with significant declines. For example, the terrorist attacks in Paris in 2015 led to a drop in sales of the order of 30% to 35% in the luxury hotel sector. But this did not mean that hotels stopped welcoming customers. The same applies to other health crises such as SARS or the H1N1 virus: not a single hotel thought about closing its doors. The trend is completely reversed. Some hoteliers are now questioning the wisdom of staying open. That a large proportion of hotels in Europe and many other countries around the world are closedis absolutely crazy. Without getting too dramatic, apart from in war zones such as Syria or Iraq, where the only hotels that work are those requisitioned to accommodate firefighters, medical staff, people who find themselves trapped or a few customers, I can't think of any other parallels.
Who are the customers for these hotels that are still open?
O. P. - For those that are still open, occupancy levels are extremely low. You can't really talk about customers. There are no more business trips or leisure activities, just a few people who still have to travel and all those people who need accommodation because their flights have been cancelled or because they have been trapped by the confinement. For example, the Residence Inn in Toulouse is still receiving seven or eight customers from the aeronautics sector who can no longer go home. This represents a large proportion of the traffic.
I never imagined that one day this would happen
How long can this situation continue?
O. P. - It's difficult to assess. If we look at the figures published by STR, we can see that China, after hitting a low point, is slowly beginning to recover, but at levels of visitor numbers that are still very low, around 20%. In Europe, while Italy has already fallen below China, the rest of the continent unfortunately still has some digesting to do. a withdrawal phase before entering a phase of stabilisation and then recovery.
What impact will the current health crisis have on future demand?
O. P. - Although we do not yet know the precise impact of Covid-19 on the French and global economy, it will certainly put a strain on the cash flow of a large number of businesses. As a result, hoteliers will have to struggling to win back the MICE market. In every crisis, particularly that of 2008, one of the first budgets to be slashed, along with communications, is that of seminars and conventions. There's no reason why the current situation should be an exception. The seminar market is likely to be in bad shape for the rest of 2020. Even in a context of recovery, it will not be in the best of shape. Not all the events that could not be held in the second quarter will be carried over to September, not only because things are already planned for this traditionally strong period, but also because budgets will be revised downwards.
Hotels will have a hard time winning back the MICE market
Are you just as pessimistic about individual business travel?
O. P. - There's no reason why things shouldn't pick up again fairly quickly once the health crisis is over. People won't have seen each other for a while and will have need to meet. The same goes for individual leisure customers. Once this difficult period is over, people will forget about it fairly quickly and will want to get out of the house and get moving, myself included. So things should start to pick up again quite nicely, especially as we enter the summer period. This dynamic should be favourable for the national hotel industry, as a large number of French people will want to stay in a known sanitary environment, in the event of a resurgence of the virus.
Can hoteliers envisage this likely recovery today?
O. P. - So that their clients can begin to plan for the future, I hope they will have the foresight tomake their cancellation conditions more flexible and repayment. I'll take my own example. We have an in-house seminar planned for June. When and where should I hold it? If I can find a hotel that allows me to cancel up to D-7 without incurring any charges, I can get organised. But, for the moment, I'm in no hurry to organise this event, even though we don't know when the lockdown will end. On the other hand, a certain flexibility may lead me to make a decision. I haven't yet seen this type of offer. And the same applies to individual customers who don't know when to organise their next family weekend. Is it mid-May, late May, June, or even early July? They're not going to want to book a hotel with a non-cancellable, non-refundable rate, or a more flexible package that will cost them a lot more. As a result, she plans nothing. So it would probably be better for hoteliers to say to themselves, "I'm easing up a bit on the issues of rate modulation or reimbursement", to support demand.
Aren't hoteliers a bit overwhelmed by events?
O. P. - They're completely knocked out, into the total unknown. Some have been forced to close, with the potential cash flow problems of loans on their premises and bills of exchange to pay behind them. It's not easy to juggle their teams between unemployment and part-time work, and the procedures involved are not always easy to understand. Today, they are suffering and are not yet responding to the crisis. The way out still seems a long way off.
When will the hotel industry return to more favourable results?
O. P. - I think that tension in the sector could last between 18 and 24 months. That's what the previous examples show. After the SARS health crisis, the hotel industry returned to its previous level after three to six months. But if we look at the financial crisis of 2008, between the time things started to go down and the return to normal, it took between two and a half and three and a half years old. If we were only in the midst of a health crisis today, with the assumption of an outcome in two months' time, a return to normal could be achieved in six months. But the impact of Covid-19 on the global economy will be much greater. If it drags on for too long, the economic crisis could be even more severe than that of 2008, and the 18 to 24 months I mentioned would then be exceeded. For the time being, the negative momentum on the economy is even stronger than in 2008, but it could be reduced over time. It is still difficult to see what the full impact will be.
