How the Hotel Industry Will Bounce Back After COVID-19

The resiliency of the hotel industry will help it rebound as the effects of the coronavirus ebb, according to GlobalData, a data and analytics firm.

“It is imperative that hotels across the globe remember how they have overcome a range of past crises, such as natural disasters, the SARS outbreak and acts of terrorism when thinking through their strategies to handle the COVID-19 crisis,” said Ralph Hollister, a travel and tourism analyst for GlobalData. “As the impact of COVID-19 lessens and demand increases, it is crucial that hotels act in a proactive manner by effectively managing room rates and marketing offers to maximize revenues.”

He added, “Hotels that are the fastest to drop their room rates and who provide the heaviest discounts will often be the last ones to recover when demand eventually returns. Many hotels will not be able to return to their normal rates instantly after demand for travel returns.”

In the view of Becky Lukovic of Bella Travel Planning, it depends on how deep the discounts are and how many properties are offering them.

“The public is expecting discounts so they will be drawn to the properties offering [them], provided they are in an [properties with] acceptable levels of comfort and service,” she said. “That said, those who discount may take longer to recoup their lost income and it might be difficult to stay afloat. We also need to keep in mind that a good portion of the traveling public may also be hurting financially, so travelers may need these discounts to even consider traveling.

Claire Schoeder of Elevations Travel noted that in the past, hotels were the fastest at dramatically dropping rates subsequently had issues in obtaining new bookings when demand increased and rates were raised significantly.

“Travelers saw that and selected hotels that did not appear to have substantial price increases when demand increased,” she said. “A number of hotels lowered prices a bit and then simply raised rates as demand increased. There was not a substantial decrease or increase,” she said.

Meanwhile, Susie Chau of Carpe Diem Traveler believes that hotel rates will need to be adjusted going forward, and in all likelihood, increase based on supply and demand.

“Some hotels may offer initial discounts to lure the first wave of travelers, but that’s likely not financially sustainable after such devastating losses over the period that the travel restrictions will last,” she said.

Travel advisors, meanwhile, were mixed on how and when the hotel industry will make a recovery.

“If this ends relatively soon (like before summer), then I think people will trickle back into travel in the summer and many will keep their reservations for fall,” Lukovic said. “That said, we have an election coming up, and historically, from my perspective, the uncertainty an election brings keeps people home near those months.”

Said Chau, “Some travelers will have very itchy feet and want to leave home as soon as possible, while others may be more cautious in the beginning and/or will not have the same financial means to travel as they did before the crisis.”

For her part, Schoeder is of the opinion that the hotel industry will indeed be one of the first travel segments to bounce back. “I think we will see hotels offering very attractive promotions that will not damage their brand to get people booking again,” she said.