US hotel owners are bracing for a difficult 2021, as the sector continues to reel from a historic drop in bookings due to the raging coronavirus pandemic, a media report said.
“The start of Covid-19 vaccinations in the US and Europe raised the prospect that people would start traveling again and sent shares in hotel owners and operators soaring, but investors and analysts say bookings will take years to rise back to pre-pandemic levels,” Xinhua news agency quoted The Wall Street Journal (WSJ) report as saying on Saturday.
Meanwhile, the industry faces growing financial stress as property owners struggle to pay their mortgage bills, wages and other expenses, it added.
“Despite the record drop in bookings, many US hotels have been able to stay open thanks to debt relief from banks and temporary government aid like the Paycheck Protection Program. Now some lenders are starting to lose patience, which could lead to an increase in foreclosures and distressed-property sales in the first half of 2021,” brokers and investors were quoted as saying in the report.
In a November report, S&P Global Ratings estimated that revenue per available hotel room fell by 50 per cent in the US in 2020.
The ratings agency expects revenue to pick up in 2021, but estimates that it will still be 20 to 30 per cent lower than in 2019.
It doesn’t expect revenues to fully recover before 2023.
“Business travel is a particular concern. While some analysts expect tourism to resume at an almost-normal pace by the second half of 2021 in many places, cost cutting and the rising popularity of virtual meetings could mean fewer corporate credit cards will be swiped at hotels for the foreseeable future,” said the WSJ report.
Outside of business-travel hot spots and big conference hotels, the outlook is less bleak.
Millions of Americans who have been mostly confined to their homes for the better part of a year are itching to travel again.
The paper quoted analysts as saying that “they expect a surge in bookings in popular leisure-travel destinations like Miami or San Diego once vaccines are widely available and people feel safe”.
However, three weeks into the most ambitious vaccination campaign in modern US history, far fewer people than expected are being immunised against Covid-19 as the process moves slower than officials had projected and has been beset by confusion and disorganization in many states, said a different WSJ report on Saturday.
“As a result, the federal government came nowhere close to vaccinating 20 million people by the end of 2020, as it had promised,” it added.
Of the more than 12 million doses of vaccines from Moderna and Pfizer and BioNTech that have been shipped, only 2.8 million have been administered.
Confirmed Covid-19 cases in the US has reached a total of 20,396,243 as the discovery of a highly contagious new virus strain in the country increases pressure to speed up the vaccination process.
The death toll currently stands at 349,933, according to the Johns Hopkins University.
The country, which makes up about 4 per cent of the world’s population, now accounts for nearly one-quarter of over 83.8 million cases and 19 per cent of 1.8 million deaths reported worldwide, showed the university’s data.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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