(Newswire.net — December 23, 2020) — National lockdowns from the coronavirus pandemic brought the global economy to its knees. This year, millions of businesses were disrupted. As a result, stock portfolios plummeted in the early spring. Nevertheless, most people have since recovered their portfolio value. Unfortunately, certain industries remain crippled by travel restrictions. Not to mention, the pandemic still has many people afraid to travel.
How the Pandemic Has Affected the Hospitality Industry
Recently, front desk hotel software Has been exploding. In response to the pandemic, hotels have changed operational procedures. By keeping their businesses efficient, hotels are beginning to also recover. On the other hand, there is still a long way for the industry to go before it makes a full recovery.
Investors Have Been Pessimistic
At the beginning of the year, hotel stocks fell through the floor. Depending on which asset class you looked at, some fell by as much as 90%. Many investors continue to look pessimistically on the real estate industry. In particular, hotel stocks have been suppressed.
Initial Outlooks Depended on the Course of the Virus
Much of this suppression is attributed to a decline in the revenue per available hotel room. A combination of high vacancy rates along with low room fees, has really hit the hotel industry hard.
Some Indications of Long Term Price Suppression:
According to most economists, hotels will recover. However, opinions vary widely as to the time it will require. Some reports are beginning to emerge that paint a more optimistic picture. Most of this is because of the release of several vaccines.
New Hope Injected by the Development of Successful Vaccines
Since the beginning of the pandemic, people have been waiting patiently for a vaccine. Today, several are on the market. Each of them seems to be effective. Therefore, plenty of people are becoming more optimistic. Nevertheless, there is still work that needs to be done. When you are considering vaccinating an entire population, it takes time. Not only do you need to produce the vaccines, but you need to get people willing to take them as well.
Economy Class Dwelling Are the Least Impacted
So far, the least impacted segment of the hotel industry is the economy class. Despite high vacancy rates, economy class hotels are rebounding swiftly. Part of this is because of the reduction in room prices. Plus, people like to travel over the holidays. Therefore, more rooms are being occupied than at the beginning of the year.
Luxury Hotels Occupancy Down by 85% or More:
The most severely impacted segment of the hotel industry would be the luxury segment. Some luxury hotels continue to experience as much as 85% higher rates of vacancy than at the same time last year. Despite the continued elevation of vacancies, long term trends are beginning to reverse. Hopefully, within a few years, the luxury hotel sector will revert to normal. In the meantime, economy class hotels represent a better investment opportunity.
Lower Valuations Could Signal Great Opportunities
Suppose you could see the future. You would expect luxury travel to return to pre-pandemic levels within a few years. Therefore, the stocks of luxury hotels could be among the best investment opportunities. As long as you can wait, the return on your investment has incredible potential.
Pennies on the Dollar:
Even compared to earlier this year, many luxury hotels are trading for a fraction of their cost. If you believe travel will return, this could be a sweet deal. With the arrival of new vaccines, this is looking more and more likely.
The Future of the Travel and Hospitality Industries
Travel and hospitality are among the most severely impacted industries in the entire economy. Although many industries have recovered almost entirely, these segments are still struggling. New vaccines are beginning to signal the winds of change. By this time next year, things will probably look much different.