How would you describe the current situation?
T. E. - It's unprecedented. I've been using that word a lot over the last few weeks, but that's really what it is: what's happening today is unprecedented. absolutely unprecedented in the hotel sector. Of course, there are cycles in every industry, and the hotel industry has had its share of difficult moments in the past, whether it was the financial crisis of 2008, the terrorist attacks of 11 September or others more recently in Europe, or regional health problems such as SARS in Asia or MERS in the Middle East. But we have never experienced a situation where demand had evaporated. The results we presented last week show a decline of 90% in revenue per room. This is unique. And what's even more unique is that a a large number of hotels are now closed. In a hundred years, apart from renovations, this had never happened before. The impact of this epidemic is therefore unprecedented in terms of its scale, geographical reach and speed.
Is the example of China, the first country to enter the crisis, instructive in estimating when the European hotel industry will recover?
T. E. - Europe is where China was a month ago, with hotels closed and the population confined. But the confinement has ended and the vast majority of hotels are now open. open again in China. We're starting to get positive signals from this country, with visitor numbers almost doubling in recent weeks. Admittedly, this is starting from a very low base, but the occupancy rate is now around 20%. That's still a sign of recovery.
We have never before experienced a situation where demand has evaporated.
Where will Europe be at this stage?
T. E. - We are in the downward phase. Confinement has been imposed in most markets for a week or two, and a little longer in Italy. We could see a period ranging from one month to six weeks during which people will be confined to their homes before hotels start to reopen. Of course, all this depends on how the virus is brought under control. If social distancing works, people will eventually be allowed to leave their homes and travel again. In that case, we could see developments similar to those in China. But everything depends on how well the virus is controlled. We can't make any predictions.
What form will the recovery take?
T. E. - It is not yet known. After the financial crisis of 2008, it took a very long time for footfall to return to previous levels. But the declines then were not as great as they are now. Initially, there was talk of a V-shaped recovery, but this seems less and less likely given the global scale of the epidemic and the impact of the virus on the economy. We haven't hit bottom yet. I'm not an economist, so I won't give any predictions on that. But, in my opinion, the recovery will depend on a combination of three factors These include the way in which the virus will be brought under control, the economic impact of the epidemic in both the short and medium term, and the interventions put in place by governments. To all this I would add a fourth factor: changing travel habits.
What do you mean by that?
T. E. - A large number of questions arise. Baby boomers, for example, have been frequent travellers in recent years, but they are a population more directly affected by the virus. Could this change the way they approach travel? Will leisure destinations be affected more profoundly and for longer than others? There are also many unknowns as far as air services are concerned. Never before have we seen such a high level of flight cancellations, with some airlines even stopping operations. The impact of the epidemic on the airline industry will undoubtedly have an effect on the hotel sector. In this context, the world's major cities should recover more quickly because there is greater demand for flights.
What changes do you foresee in business travel?
T. E. - A number of questions will arise in the coming months, which will undoubtedly have an impact on future results in the hotel industry. For example, will large companies be changing their staffing policies? risk management about business travel? Will they issue instructions about large business gatherings in the future? We'll be watching this closely. Faced with possible economic difficulties, companies should also take a close look at non-essential travel.
Could virtual meetings become the new norm?
T. E. - Videoconferencing solutions are very popular these days. People feel more confident about these systems, Will this change things? That remains to be seen. We often hear that, once it's up and running, videoconferencing could replace travel. Nothing has materialised so far. There's nothing that goes beyond human interaction, face-to-face meetings. It's part of the human instinct. I don't think that will change in the future. We work in a blessed sector. People want to travel, discover and meet each other. Of course, there will be difficult times, there will be shocks, but the hotel industry will bounce back, that's for sure.
