Why new hotels are opening amid the pandemic
To say that Covid-19 has hurt the hotel industry, along with travel as a whole, is something of an understatement.
According to Hotel News Now, the news division of hotel research company STR, the sector has seen a loss of 5 million jobs since February in the United States alone. And Zachary Sears, a senior economist at Tourism Economics, part of research firm Oxford Economics, says that hotel occupancy in some instances is down 95% versus a year ago.
“Properties have been forced to close permanently because of the financial loss they’ve taken,” he says.
In fact, the American Lodging and Hotel Industry released a report on August 31 that indicates 65% of hotels remain at or below 50% occupancy. The same report states that consumer travel is at an all-time low and that only 38% of Americans say they are likely to take a leisure vacation by the end of the year. In normal circumstances, 70% of Americans take a vacation in any given year.
Hope with new openings
Despite the bleak scenario and the continuing pandemic, there is a bright spot: from Europe and the United States to Africa, Asia and Australia, a spate of new hotels from bigger brands as well as smaller owners are set to open this fall and into the winter.
“The next several months are a busy time for hotel openings,” says Leo Sorcher, the founder of luxury travel company Inhabit the World. “They show a light at the end of this long tunnel.”
In the United States, The Inn at the Mission San Juan Capistrano in California will open in September in the heart of downtown near the city’s famous 19th century church ruins. Also in September, the artists enclave and celebrity hideaway of New Hope, Pennsylvania, will see the opening of luxury boutique property River House at Odette’s. Come November, Palm Beach will have White Elephant, the second location of Nantucket’s well-known eponymous resort.
In Europe, London will have two new hotels in the fall: The Mayfair Townhouse, in Mayfair, along with The Mitre Hampton Court. In Madrid, the Mandarin Oriental Ritz is set to make splashy debut in early 2021.
The list goes on and includes One&Only Desaru Coast in Malaysia, Angama Safari Camp in Kenya’s Maasai Mara and The Oval Hotel in Adelaide, Australia, on the grounds of the city’s Oval stadium.
Delayed, not dead
Most of the properties making their debut in the coming months had their original opening dates pushed later because of the pandemic, but even in a battered economy, they didn’t abandon their plans to go forward.
River House at Odette’s was due to open early this summer instead of September. Ron Gorodesky, the developer and managing director, said that the hotel was under construction when Covid-19 hit and forced the project to a temporary stop. “We’re only delayed by a few months but have seen a huge financial loss,” he says. “We had 40 weddings scheduled this year, and most have gotten moved to next year while a handful were canceled.”
But Gorodesky never thought not to open. “New Hope is a great destination year-round with an incredible arts scene and restaurants,” he says. “I believe in the drive market potential.”
Opening a high-end hotel, something there is a dearth of in New Hope, is also an incentive to stay committed to River House, according to Gorodesky. The 36-room property has a contemporary design, Prohibition style rooftop club and a piano lounge featuring live music.
The Mayfair Townhouse in London is also delayed by a few months while The Mitre Hampton Court is actually on track to open in September as planned.
Sorcher says that these delays are minor in the bigger picture and par for the course even in ordinary circumstances. “Openings get pushed all time. It’s almost expected,” he says.
In general, according to Stephanie Ricca, the editorial director of Hotel News Now, hotel projects can take anywhere from 18 months to three years from the planning stages to completion. “Once a property is under construction, it’s almost certainly going to open, so the ones debuting this fall were already well underway,” she says.
Going forward, however, properties in the early stages of planning may see significant delays, says Ricca, or get deferred to an unknown date. Some will get abandoned all together.
As of June 19, according to Hotel News Now, 19 hotels projects were deferred in the United States. “Given the economy, some hoteliers don’t want to make a big financial investment or may have an issue getting loans,” says Ricca.
The industry will bounce back
Overall, experts say, the hotel industry will bounce back, although it’s hard to know when.
“In all likelihood, there is going to be a remedy for coronavirus which means the industry will recover,” says Sears of Tourism Economics. “It’s a question of timing, but in the meantime, hotels will continue to open.”
Ricca agrees as does Sorcher of Inhabit the World. In fact, he believes that the hotels opening in the current environment have a better chance of success than usual.
“The people behind these properties have been observing the pandemic and they’re seeing how other hotels are handling it and what’s worked and hasn’t,” he says. “They’re in a good place to do well.”