With all that happened in 2020, it’s no surprise that many industries—including the hotel industry—suffered through challenges. Vaccinations being released and offered to the public have brought optimism to 2021, however, providing hope to hoteliers and investors for the upcoming year. To recover from 2020, hoteliers should focus on applying the following trends to their businesses in 2021.
Government Support
As with last year, the hotel market will continue to receive support from the government at levels never seen before. The hospitality industry was one of the hardest sectors hit by COVID-19 due to the restrictions set for these businesses and the lockdowns keeping customers at home rather than going out. Programs like Eat Out to Help Out (EOHO) were created by the government to help support hospitality businesses; EOHO, in particular, was meant to boost customer demand for eating out in August 2020. It also reduced VAT rates, implemented a business rates holiday that’s been extended to 30 June 2021, and offered a series of small business grants to keep small businesses afloat.
Hotels that are struggling with managing cash flow and operational costs should look into government support sooner rather than later, as this support will not be indefinite.
Seller and Buyer Sentiment
Buyers are now making offers based on their current cash due to the current lending sentiment. Other buyers, both private and corporate, are keeping an eye on pricing and availability in 2021 before making offers to sellers. Some banks will be looking to finance hotels in the coming months, while other lenders are looking into buying at an increased rate as well. Hoteliers looking to sell their hotels should come to terms with how the pandemic has affected the market and be aware of how a reduction in trade will affect pricing in the future.
Alternative Use Interest
Over the past few months, there has been an increase in buyers looking to repurpose hotel assets. This has shown the opportunity for extracting worth in excess. It’s far too easy for vendors to look at these offers as an opportunity, but beware: there are pitfalls in these offers that could come back negatively. Hoteliers should ensure they’re dealing with a qualified and experienced agency team before accepting anything, complete with an in-house planning and development team. This team should have first-hand experience in handling these concerns and be ready for any alternative scenarios that come their way.