Prepared for Tom L. | Delivered April 24, 2020
Independent Hotels and COVID-19
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To determine the number of independent hotels that will go into foreclosure due to the Covid-19 outbreak.
Impact on the hotel industry
According to an article published by Hotel New, there are
two possible scenarios
for the hotel industry.
As seen after other recessions, including the
recent recovery of the Chinese
hotel industry after COVID-19 was contained, leisure demand will rise because people will want to escape from home after spending so much time confined in it.
Overall, it has been historically proven that the hotel and leisure industries
recover the fastest
after a recession. While the COVID-19 pandemic is not a typical recession, experts still believe that the hotel industry will be able to gain back what it lost during the isolation period.
However, it is also possible that
unemployment will rise
, which would mean that a lot of the regular visitors will not be able to travel or go on vacations.
high number of infected
and deceased people in the US could also impact demand as people will be scared to visit the country in the foreseeable future.
This is further supported by the fact that the occupancy rates declined from
70.0% to below 25.0%
since the beginning of the epidemic according to the American Hotels and Lodging Association (AHLA).
Demand will also be influenced by how soon
allow their representatives to
resume travel and return
to their normal duties, which would also include corporate events.
Future of the independent hotels
While we weren't able find a specific article that shows how many independently-owned hotels will close down, it has been stated that individual hotels will be hit the hardest, projecting occupancy levels
for upcoming months.
Of the 33,000 small hotel businesses, it is predicted that the majority of them will be
forced to close down
if the situation does not improve in the next few months.
So far, there have been close to
3.9 million employees
that have either been laid off or will be eliminated in the next few weeks.
The total loss of the industry so far amounts to
$2.4 billion per week
but this figure is estimated to climb to $3.5 billion in the next few weeks.
It has also been estimated that non-disclosed operators, which includes independently-owned hotels, in the leisure industry will lose over
Moreover, it is much harder for small independent hotels to get access to the governments' funds,
further accelerate the losses
in the segment.
It is also predicted that a there is a big possibility for smaller independent hotels to turn to bigger brands for help after the epidemic, which will lead to a significant growth in the
conversion of independent boutique hotels