During the first two months of the year, year-to-date figures for European hotels showed positive growth of revenue per available room (RevPAR), due to increase of average daily rate (ADR) and despite the minor decline in occupancy.
After this relatively good start to the year, Europe was hit by the COVID-19 crisis, which has seen occupancy levels drop rapidly in the first half of March. While initially, some markets were less affected than others (such as UK), most hotels are now closed across the whole Europe, except for some airport locations.
Borivoj Vokrinek, Head of Hospitality Research EMEA at Cushman & Wakefield, explained: “Various stakeholders, including owners, operators and banks are engaging in finding compromise solutions including fee reductions or deferrals, reduced rent payments or rent holidays, as well as loan payment suspensions and new credit lines.
“The focus for the hotel sector has been on finding temporary solutions to navigate this crisis, rather than drastic irreversible measures, and hoping for a recovery in the second half of the year. There is no doubt that government support across Europe will be critical for hotels to be able to overcome this crisis.”
Some hotels in Europe are being converted into hospitals, quarantine facilities, shelters, temporary logistic spaces or even serve as temporary work locations with rooms being offered as private offices to those who struggle to work from home. Also, hotel restaurants are being used to produce food for delivery and staff are being re-deployed with delivery companies or in other sectors.
Jonathan Hubbard, Head of Hospitality EMEA at Cushman & Wakefield, said: “Despite the lockdown, some transaction and leasing activity continues across Europe and there are a number of equity rich agile investors seeking to take advantage of opportunities that will arise in the coming months to recapitalize stressed investments and acquire potentially distressed assets.”
Cushman & Wakefield interviewed 49 EMEA hotel investors in mid-March 2020, 41% said that they are still looking at deal opportunities.