From the desks of the Hotel News Now editorial staff:
- Companies coping with new reality
- CBRE revises industry projections
- Ashford execs detail debt issues
- The challenge of opening amid a crisis
- Banks preparing for PPP forgiveness wave
Companies coping with new reality: The Wall Street Journal reports that companies across all industries are struggling to adjust to “a new economic reality” for the world following the spread of COVID-19, which includes the idea that reopening is as difficult as being closed.
“Facing higher costs to keep workers and customers safe and an indefinite period of suppressed demand, businesses are navigating an ever-narrower path to profitability,” the newspaper reports. “To make the math work, some businesses are cutting services and jobs. Others are raising prices, including imposing coronavirus-related fees aimed at getting customers to share some of the expenses.”
CBRE revises industry projections: Researchers at CBRE Hotels are projecting “a relatively rapid recovery” for the U.S. hotel industry in 2021 and 2022 but significant pain before then, according to the company’s latest forecasts. Full-year 2020 projections now call for 41% occupancy (a 38% year-over-year decrease), a 22.5% drop in average daily rate to $101.67, and a 51.9% drop in revenue per available room to $41.67.
The company projects occupancy will reach 55.9% in 2021 (up 36.3%), while ADR will hit $110.69 (up 8.9%) and RevPAR will go up 48.4% to $61.83.
CBRE’s projections for both 2020 and 2021 are slightly better than recent projections from HNN’s parent company STR and Tourism Economics.
Ashford execs detail debt issues: Newly appointed Ashford Hospitality Trust President and CEO J. Robison Hays said he believes his company went into the current crisis with too much debt, and he admitted during a recent earning call the company has stopped paying nearly all of its debt service, HNN’s Sean McCracken reports. The company is in active discussion with its lenders, some of which have been “difficult to deal with,” he said.
“Most discussions are on temporary forbearances, ranging three to six months or deferring interest to a later date,” Hays said.
The challenge of opening amid a crisis: The road to opening has not gone as planned for The Villa Copenhagen in Denmark’s capital or its GM Peter Høgh Pedersen. HNN’s Danielle Hess spoke with Pedersen on the bumpy road to opening, which has included delays due to the COVID-19 pandemic. The property was originally slated to open on 1 April, and now is expected to open in July.
“These were very awkward things to have to deal with in a ramp-up,” Pedersen said. “But at that time (in early March) … we didn’t have any anticipation to what extent this would be affecting (us). But boy, did we get a wake-up call over that week.”
Banks preparing for PPP forgiveness wave: The next stage of the Paycheck Protection Program is expected to hit soon as lenders anticipate a wave of forgiveness requests, Bloomberg reports. That process requires lenders to “sort through a detailed application document, complete the paperwork and get it to the Small Business Administration for approval,” the news service reports.
At New Jersey-based Valley National Bancorp, which issues roughly $2.2 billion in PPP loans, executives are designating 500 of their 3,200 employees to deal with forgiveness requests.
“Hopefully it doesn’t all come at one time and we can stagger it over a period of time, but I do believe there’s going to be a lot of hand-holding associated with it as you walk through it,” CEO Ira Robbins said.
Compiled by Sean McCracken.