By: Kaushik Vardharajan, Director, Real Estate Program Boston University School of Hospitality Administration
It was a year ago, on March 11, 2020, when the WHO declared the COVID-19 outbreak a pandemic of global proportions, leading to lockdowns of many countries and an almost complete cessation of travel across the world. Once the scale and seriousness of the pandemic became clear, the hospitality industry’s immediate focus shifted to ensuring the safety and security of guests and employees, supporting medical professionals, other first responders, and helping out in their local communities. As demand plummeted to levels never seen before, the industry had to create new operating procedures to significantly reduce costs and ensure the survival of the business entities that own, brand and manage these hotels.
Our special Real Estate edition of the Boston Hospitality Review focuses on matters of critical importance to stakeholders in hospitality real estate. Dan Lesser at LW Hospitality Advisors writes about the impact of COVID on hotel transactions in the US in 2020 and shares his thoughts on who will be buying hotels in the near future and the types of hotel assets that they will find attractive. Chad Sorenson and Gabriel Stein of CHMWarnick detail the unprecedented journey of learning and adaptation in asset management over the last twelve months and the lasting impact on the practice going forward. Mark Owens, John Avanzino, and Robert Webster at CBRE present a comprehensive timeline of how the pandemic affected hospitality capital markets, how various sources of capital reacted to the turbulence in the industry, and what the future holds for those looking to raise funds to buy or build hotels in the short term.
Opportunity lies in the midst of chaos. As hotel owners struggle with assets operating at very low occupancy levels with no clarity on a recovery timeline, a conversion of the hotel to other uses that can generate stronger returns faster is an attractive option. Zach Bowyer and Serena Lipton of JLL present an overview of the growing Senior Living industry, the opportunities in this space, and how hotel spaces are a natural fit for conversion into senior living facilities. And closer to home, just outside of Boston, Brian Testorf, Sean Cuthbertson, and Jonathan Jaeger of LW Hospitality Advisors look at the performance of Bed & Breakfast inns (B&B) in Cape Cod and examine if their business model is sustainable in the background of the growing home rental sector and high real estate prices.
We believe everyone benefits when industry and academia work together. In these turbulent times when every stakeholder is trying to predict the future and time the recovery, Dr. John O’Neill from Penn State School of Hospitality Management examines the various factors that impact lodging demand and identifies those that are the strongest determinants of demand recovery in the future.
While the last twelve months have been incredibly difficult for countries, industries, and people across the world, the development and continued distribution of vaccines globally represents a monumental achievement that will kickstart the process of recovery. Effective economic policies will help revitalize businesses struggling due to the pandemic and also lead to an accelerated return of demand to the hospitality industry. The past year forced industry stakeholders to become nimbler, more innovative, slash costs and improve efficiencies, and create new operating procedures, all in the attempt to survive the pandemic. As we look into the future, we do believe people will start traveling again and demand will return. As we embark on the path to a recovery, the hard-learnt lessons from 2020 will hold us in good stead and make our industry that much more resilient in the future.