Up to 79% of hotels in the Middle East and North Africa (MENA) region will partially or fully close due to low occupancy rates, Colliers International has found. The closures come in light of the ongoing worldwide coronavirus (COVID-19) pandemic and subsequent travel bans.
Colliers International surveyed hotel investors from 25 cities across MENA region for their perspective on the current situation. The survey also gathered evidence on how they have responded to the pandemic, and their thoughts on the market moving forward.
Of the respondents, Colliers International identified 65% as owning existing hotels.
Colliers explained that salary reductions, staff layoffs or forced leave, and full or partial closure of hotels were the most common responses to the coronavirus pandemic among hotel owners.
“When it comes to owners with hotels under construction or with development plans underway, we found that 65% have no plans to scale back. However, 35% of respondents have reservations about proceeding with development plans,” according to colliers.
A total of 39% of investors believe occupancy for the full year 2020 will be between 21-40%, while 33% believe that the occupancy will be between 41-60% in their respective markets. Meanwhile, 24% believe that occupancy will be between 0-20%, with only 4% expecting occupancy to be 60% and above.
Most hotel investors remain hopeful for a relatively quick recovery period, in which 46% of respondents expect the recovery to begin in the fourth quarter of 2020.
Collier found that 54% of respondents expect the market to take about six to 12 months (from the start of recovery) for the hotel market to return to 2019 occupancy levels.
The majority of hotel owners and investors have a positive outlook on the future of the hospitality industry.
Overall, 52% of respondents expect to see development opportunities in the medium term, while 39% would like to focus on refurbishment and property upgrades. A total of 26% will focus on acquisitions and 22% on restructuring. Only 7% of the respondents said that they do not see any opportunities in the medium term.
When it comes to expected changes to the industry in the long term, over a quarter of the respondents (or 26%) believe that the market will get back to “business as usual”. The vast majority, or 74%, agree that the industry must be better prepared in the future for a similar type of event, by implementing better crisis management planning.