This panel discussion explored the significant impact COVID has had on the travel and toursim industry and the knock on effects to other businesses as a result. There were also some interesting predictions made about what we can expect to see in the future. The panellists were Robert Webster – President of Hotels Travel and Tourism group CBRE, Luis Yofe – Director of Travel and Logistics CRDF Global director of travel of logistics CRGF Global Chris Zweigenthal – CEO OF Airlines Association of South Africa.
Some of the key insights were:
- Unsurprisingly, the consensus was that the speed and wide-spread impact of COVID-19 restrictions on airlines and the global travel industry has been severe. Shifts in how we do business from face-to face to being facilitated remotely (like the INSOL conference itself) are expected to have long term impacts on business air travel and hotel accommodation. Leisure travel is likely to be more resilient with a built up desire to travel in response to lockdowns meaning there is already greater demand for it. Domestic travel at “drive to” destinations is already seeing the benefit of that demand.
- A projected return to near pre-COVID-19 levels in these industries is presently being forecast for 2024.
- Liquidity stress for hotel owners in the US market is severe. The number of hotel asset sales in the US are down to 10% of the period in the previous year, with value being achieved at 25% to 35% of hotels’ pre-COVID-19 value. A significant increase in the number of sales through the latter half of this year and into 2021 is expected. Interested acquirers in this sector are cashed up and active.
- Hotels will break down into those which are durable assets (for example select service hotels), where sale prices will continue to suffer a discount in price on sale but will generally hold their value, contrasted with hotels which are likely to be vulnerable (for instance, full service hotels targeting the convention market) and more likely to be the subject of enforcement.
- Recovery in the airline industry is subject to considerable uncertainty and there are numerous variables resulting from different domestic and international approaches to regulation and responses to COVID-19. Consolidation in the industry is to be expected.
Related materials prepared by Baker McKenzie
- Client Alert: Australia: Recognition of the Thai Airways business reorganisation proceeding in Australia under the Model Law
- Australia: 10 things to know about Hotel Management Agreements