Muted Business Travel Delays Hotels’ Recovery Start to 2022
New pandemic waves, limited corporate travel and events and border restrictions continue to pressure EMEA hotel groups, with no meaningful recovery likely until 2022, Fitch Ratings says. Performance varies by location, segment and property structure. However, Fitch expects most Fitchrated hotel groups to report losses in 2021. This is due to still significantly impaired revenue per available room (RevPAR), which will not recover to 2019 levels in full until 2025. RevPAR has regained momentum, aided by the summer season, strong domestic demand and rising room rates.
Nevertheless, full-year RevPAR will be only slightly above 2020 levels and around 60% below prepandemic levels due to disruption in 1H21 and what we expect to be a typically weak fourth quarter for leisure-related travel. Budget and economy categories continue to outperform the upscale segment, while there is material pent-up demand for luxury travel. Fitch expect coastal and countryside destinations to remain more popular than urban destinations. In the absence of international travellers, especially in large cities, hotels with strong national brand awareness continue to benefit from domestic demand.
The lifting of border restrictions and a resumption of corporate trips are essential for a meaningful recovery in 2022, albeit to forecasted levels that are still 20% below 2019 levels. However, corporate travel will remain limited while social distancing continues and companies enforce cost-saving programmes. The 2020 revenue collapse forced hotels to test their capacity for cost reduction. This test continues in 2021 with the gradual termination of public support. Hotels that own, and/or can dispose of, valuable real estate assets will have enhanced financial flexibility