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The Covid-19 crisis has had a global impact on the economy. One of the most impacted sectors
is the hotel industry since all international travel was suspended abruptly and is still limited at
the end of 2021.
What is the Covid-19 impact on the hotel groups financial, investment, and asset management
strategy?
By analyzing the impacts of Covid-19 on the four biggest international hotel groups (Marriott
International, Hilton Worldwide Holdings, Accor SA, and IHG Hotels Group), we aim at
offering recommendations to guide the hotel industry in its recovery. These potential
approaches can help the hotels groups adapt to the new normal and shape their future.
To do so, we rely on the analysis of the impact of the previous global crises on the hotel industry
and on the publications covering the impact of Covid-19 on the global economy, tourism, and
the private sector in general. These publications can be from public institutions, consulting
firms, health organizations, or academic sources. The analysis of these documents set the scene
of the devastating impact of the pandemic on the global economy and on the travel flows.
From there, we analyze in detail the financial reports of the top four hotel groups to understand
the impact of Covid-19 on their earnings by analyzing (per region) their average daily rate,
occupancy, revenue per available room (RevPAR), and their operating leverage. On top of that,
we study strategies to decrease fixed costs and find fixed revenues, how do hotels groups can
adapt their financial strategy, and how Covid-19 impacts the hotel acquisitions and transactions
market.
From this analysis we highlight the winning strategies to face the Covid-19 crisis :
An asset-light strategy.
A strategy based on ADR rather than on occupancy.
An employee outsourcing strategy.
The owner priority return.
In addition, we suggest potential action plans for hotel groups to adapt their financial and
investment strategies:
Promote a financial strategy based on equity rather than on debt.
Maintain assets in the portfolio and do not sell.
Diversify geographically future acquisitions and targetting single assets.
These are the key levers we recommend actioning in order to survive and thrive despite the
global crisis.
