Expect a long recovery period for hotels hit hard by the COVID-19 pandemic. Members of The Lodging Industry Investment Council — a think tank representing the hospitality business — said that the hotel industry should recover from the drop in business caused by the virus, but no sooner than in six months. Some even worried that hotels might be used to house patients suffering from the COVID-19 virus.
That’s the takeaway from a flash survey conducted March 15 by the council. According to the survey, 27 percent of respondents predict a full recovery of net operating income for the hotel industry within six months. An additional 48 percent said they expect full normalization within six months to a year.
This means that 75 percent of respondents believe that the hotel industry’s net operating incomes will return to normal within one year.
That might seem like a long time. But considering how few people will be traveling throughout the United States in the coming weeks or months, that year-long wait for a normalized hotel business almost seems optimistic.
The survey also found that buyers in the hotel business are taking a break to wait out the COVID-19 spread. A total of 64 percent of buyers say they have stopped submitting letters of intent to purchase hotel properties. The remaining 36 percent said they are moving forward. These respondents said that having less investor competition represents an opportunity.
Another interesting finding? A total of 43 percent of LIIC respondents said they believed that the federal government and/or state governments might commandeer hotels to house patients infected with the COVID-19 virus.
And as for the overall U.S. economy? A majority of hotel investor respondents said that they expect 2020 to be the year that the United States falls into a recession. This, they said, will be the end of the strongest 10-year bull run in hotel investment history.