How is the hotel sector weathering the coronavirus storm?

August 06, 2020

Together with the airline industry, the hotel sector has been among the hardest-hit victims of the coronavirus crisis and the future of the hospitality industry has been cast under a heavy shadow with revenues collapsing by almost 75%. Above all, hotels now need to guarantee their guests a virus-proof stay, which means that demand for smart ventilation systems has now overtaken demand for disinfectant dispensers. As the number of guests and overnight stays starts to pick up again, there could even be good reason for cautious optimism.

The biggest losers of the coronavirus crisis

Hoteliers are not likely to forget spring 2020 anytime soon. In Germany, hotels were closed to private guests for near enough two months (from mid-March to mid-May, depending on the federal state). Even before the official ban, almost three-quarters of hotels, hospitality and catering companies had reported painful slumps in revenues according to Statista, the global business data platform.

In May 2020, the number of overnight stays was down by almost 75% on the previous year’s figure, with foreign travelers in particular spending around 90% fewer nights in German hotels than in May 2019. Even though people are gradually starting to travel again, especially within Germany, the hotel and restaurant industry will continue to be hit harder than most other sectors. In contrast to the retail sector, for example, lost sales cannot be made up, and lucrative bookings such as company events and wedding receptions can only take place on a very small scale, if at all. It is by no means certain whether, when and to what extent business trips, an important revenue stream for many hotels, will be possible in the near future. In a dpa survey of German companies, there was broad agreement that virtual meetings will be prioritized over business trips in the months to come. In this respect, there is hardly any difference between established market leaders such as Deutsche Bank, Rheinmetall or Thyssenkrupp, dynamic online traders such as Zalando or ICT leaders such as Deutsche Telekom. “The pandemic has acted as a further catalyst and given a significant boost to virtual collaboration,” said a spokeswoman for Deutsche Post. And this is after many companies have already reduced their business travel budgets for environmental reasons. Nevertheless, as BMW and other companies have already realized, “virtual conferences will never completely replace personal contact.”

In order to attract both private guests and business travelers back to hotels, hospitality providers have been keen to fulfil their legal obligations by creating effective health and safety protocols. As with other public spaces, safety relies heavily on physical distancing and regular hand disinfection. Hotels have also introduced one-way routes to restaurants and washrooms and been forced to reduce once opulent breakfast buffets to hygienic but joyless cold cuts under cling film and designated slots for diners.

Intelligent ventilation systems beat aerosols

Any hotel that wants to make guests confident of a virus-proof stay cannot afford to rely on the scientific advice from mid-March 2020. Over the last couple of months, epidemiologists have proved that aerosols are major vectors of coronavirus transmission, which means that intelligent ventilation systems are at least as important as convenient disinfectant dispensers. The Berufsgenossenschaft Holz und Metall (Trade Union for Wood and Metal Workers) has drawn up operational guidelines for effective ventilation measures (published in July 10, 2020), which can also serve as a benchmark for the hotel industry.

The guidelines are based on the principle of introducing as much outside air as possible into closed rooms frequented by people from different households. Rooms without mechanical ventilation need to be cross-ventilated every 20 minutes and everyone needs to be clear that protecting people’s health protection takes precedence over comfortable ambient temperatures – a few minutes of shivering or sweating in otherwise air-conditioned rooms is always preferable to an infection.

Mechanical ventilation systems should run at their rated output for at least two hours before and after use of the room or building and should continue to run at reduced output when the interior spaces are not in use in order to avoid viral deposits and to discharge contaminated particles. CO2-controlled systems run optimally with a reduced setpoint value of 400 ppm.

Circulation ventilation systems for heating, cooling and/or humidification are very problematic and should be switched off. Relying on filter technology alone is still a massive risk, at least for the time being.

Germany’s hotel sector remains attractive

Despite all of the above, the cautious relaxation of restrictions in Germany, combined with responsible health and safety plans, have already resulted in a clear upward trend according to an analysis by BNP Paribas Real Estate. “Above all, tried-and-tested hotel concepts in top locations with long-term leases will continue to meet with broad investor interest,” comments Alexander Trobitz, Head of Hotel Services at BNP Paribas, a conclusion that is clearly supported by the impressive number of deals in Berlin, Munich, Hamburg and Frankfurt of late. The appeal of the German hotel sector is also confirmed by the recent market entry of the Dutch hotel brand citizenM. “It had been clear for some time that Germany, as Europe’s strongest national economy and a sought-after travel destination, would be one of our next targets,” says Klaas van Lookeren Campagne, CEO of citizenM, demonstrating that it is never the wrong time to be optimistic, especially when you are building on the stable foundation of smart and value-oriented management.

Stephanie von Keudell

Independent journalist