The new White Water Hotel on California’s central coast has a lot to offer: a location on a moonstone beach, generously sized rooms and Scandinavian-inspired interiors through Los Angeles designer Nina Freudenberger.
Are you going to object to it? Oh, the global collapse of the hotel industry.
White Water is one of thousands of hotels that have opened or opened in the middle of the Covid-19 pandemic.According to STR, occupancy rates fell below 30% across Europe in March; Figures for M3, a company that supplies accounting to hotels in the United States, show that domestic occupancy rates have halved, even when hotels have cut prices.All of this is a component of a recession that the International Monetary Fund estimates in June will succeed at $12.5 trillion in global losses, or only about 5% of global gross domestic product.
It is a grim image for those who start a business of any kind, let alone that related to overheads and excessive amounts of underlying debt. However, Hilton opened 60 new international hotels in the last quarter of this year, while Marriott has introduced 163 homes.adding 4 Ritz-Carltons – from the beginning of the year.
Even the small indefinite hoteliers and novices are not discouraged.The owners of the Fresh good looks logo made their first foray into the hospitality store this month with the opening of the 11-room Maker Hotel in New York’s Hudson Valley; Nobu Hotels has grown its portfolio through a third place in recent months with new homes in Chicago, London and Warsaw; and PRG Hospitality Group, which owns 8 boutique hotels in California, adding White Water, is about to cut the ribbon in early summer. According to the online trading page Tophotelnews, another 775 hotels are expected to open in the Americas until the end of 2020.
This would possibly seem counterintuitive, with movements almost paralyzed, but connoisseurs say it makes sense.
Too deep
For many new hotels, the resolution to open is one that takes years, and millions of dollars, making the decision to cut the ribbon is like the last step of a road trip too long and expensive: a fatality, if you pass home.
“A typical hotel assignment can take two to five years to expand and open,” says Sean Hennessey, hotel representative and professor at the Jonathan M Hospitality Center.Tisch, NYU. Including the terrain, the prices of the structure can range from several million dollars for an economy chain hotel to billions for a luxurious monument, and the maintenance of a finished structure comes with prices that can also be allocated to the service of paying customers.
Delaying operations is an expensive proposition.” Even if the launch fails, a completed task is much more valuable than an 80% completed task,” Hennessey adds.”You have to jump into the chimney and hope for the best.”
For luxury hotels, the balance point means a lot: with 50% occupancy, an asset sometimes has enough money to pay for payroll, assuming rates remain stable, while 70% give a smart return on investment.The occupancy rate of U.S. hotels was less than 43% in June.
Despite this number, openness gives hotels the opportunity to combat the ongoing costs of the canopy, such as taxes, insurance, safe control wages, security, maintenance and fundamental energy prices, all of which must be paid, whether an asset is open or closed..
It also gives them the ability to capture local businesses.This is the logic of Rocco Forte Hotels, which until September will have reopened its entire portfolio of thirteen five-star homes around the world, while proceeding to its next 3 openings.
“My company will have an expense of $ 55 million, whereas I normally have an access of $ 35 million,” says Rocco Forte, president of the company. He adds that operating outdoor dining venues while the weather is still excellent, such as the grassy dining venue at the Hotel de Russie in Rome, makes up for bad business at night, and can be done with drastically reduced staff. “For a lot of other people in the industry, it’s about survival,” he says.
Geography problems
Location, origin and demand, debt, morale, flexibility, and a number of additional points also come into play when deciding when to open.
“It’s the story of two areas: urban and non-urban,” says Britten Shuford, co-founder of PRG.His company has noticed that occupancy rates peak at 80% at Cambria Beach Lodge, which is surf-friendly, and dropped by 20%.Los Angeles, where the Prospect Hotel operates still closed in Hollywood.Its state-of-the-art sand hotel design
The target audience also makes a difference. Phil Cordell oversees the Hilton Canopy brand, friendly and trendy urban hotels.Nine Canopies have opened so far this year, expanding portfolio length by 75%, adding venues in Philadelphia and Washington, D.C. Even if they’re in cities, think.Canopies can attract the types of travelers whose business has been a brilliant father this summer: road travelers, individual business travelers and tourists staying on vacation.
“We are at the forefront of all the openings that were planned this year,” Cordell said.
Calculate risk
Deciding to open a hotel doesn’t have to be a proposition at all or anything.Take the Maker Hotel on the popular Hudson City weekend, New York, through Lev Glazman and Alina Roytberg, founders of Good Fresh logo looks, and skilled hoteliers.Damien Janowicz.
The team took 3 years and part of upgrading, repairing and attaching 3 historic buildings in one.They opened the assets in stages: first a lounge, then a place to eat on a glass terrace and, despite everything, a coffee with a European coffee atmosphere.The trendy and temperamental hotel would debut in April and instead showed up in early August, with reservations only from Thursday to Monday, creating a buffer zone for deep cleaning among guests.Glazman says he hopes to reach the balance point in a few months.
For Rocco Forte, looking for 3 new homes, two in Italy and one in Shanghai, means maximizing economies of scale.”My organization’s long term depends to some extent on its ability to keep growing,” Says Forte.
Fortunately for him and his counterparts, in any case, the new hotels will not succeed in their first year.
“Unlike a workplace building, where tenants participate when they expand, hotels are built to specifications: no consumers are installed until the doors open,” says NYU’s Hennessey.
Opening now allows operators to resolve disorders and prepare for recovery, he adds.But they can’t run at a loss for long.”Many hotel corporations have enough money to pay overheads for 12 to 24 months,” he said.”Private owners are likely to have less resources to last that long.”
(This story was published from a stressed firm source with no text changes).
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