Hotels: can long-term rental save the sector?
The Covid-19 epidemic has hit the hotel sector hard and it’s still recovering in some cities f: many hotel chains of all stars, as well as professionals in the accommodation sector, are sounding the alarm. Despite a less disastrous summer than expected, the new confinement and compromised end-of-year festivities could cause a domino effect with the closure of many establishments.
To avoid the worst and give the hotel industry a breath of fresh air, specialists and industry professionals are proposing the possibility of democratizing the long-term rental concept, with a view to preserving jobs and business.
How can this be achieved? Will it be enough to save the hotel industry?
There are a number of unanswered questions, which we try to answer here.
Taking account of the health and economic context to find pragmatic solutions
To enable hotels to fill their rooms in the absence of foreign clientele, and taking into account a significant drop in the number of tourists, the state is trying to find solutions to save the sector, which generates both permanent and seasonal jobs. Long-term rental, which consists in bringing in a different clientele, is one way of enabling hotels to continue their activities and limit short-time working, or even lay-offs.
However, long-term rental in hotels has a number of side-effects, such as competition with seasonal accommodation owners, particularly in areas where tourism is the primary activity. Also, long-term rentals will have little impact during periods of confinement, as the French are theoretically unable to move from one region to another.
However, if confinement is lifted in December, this boost to hotel chains could stimulate bookings, and save many hotels stifled by a year like no other.
Other avenues are being explored, but long-term rental could solve some of the hotels’ revenue shortfalls without requiring major logistics. Although the hotel industry is not subject to administrative closure, nearly one in two professionals is preparing to close their establishment for lack of customers, putting many jobs at risk. Not to mention the indirect jobs affected, such as maintenance, security and landscaping companies, which are seeing part of their business disappear.
The announcement of the new confinement has dealt a heavy blow to many hotel owners. With a drop in sales of over 50% depending on the region, any initiative, however marginal, is seen by the sector as a real lifeline. Long-term rental is therefore seen as a relief solution, if not a miracle.
Focusing on local tourism and French customers with low-cost long-term rental offers
With the concept of long-term rental, hotel chains can hope to compete with real estate agencies by offering rooms at reduced prices, while also offering services such as catering. Room cleaning could also be an option, depending on the customer’s budget.
By opening up the long-term rental market to hotels, the authorities could encourage the filling of rooms for professionals on long-term assignments with clients, or for people transferring who are waiting to buy a property in the area concerned.
Tens of thousands of French people are transferred every year for professional reasons, making it a real headache to find accommodation. Taxing the hotel sector could be a win-win compromise, preserving this job-creating activity and preventing the bankruptcy of many establishments already on the ropes.
Despite this measure, many hotel managers believe that the situation will not return to normal before May 2021, when group rentals will once again be possible. More than ever, government support is essential to preserve jobs and business, or risk an unprecedented economic catastrophe in the sector. Hotels have already gone out of business in recent weeks, and while long-term rental can help those establishments that are resisting the crisis, this option does not appear to be sufficient.
We think that long-term rental can be a help for some hoteliers, but as indicated, this solution will drastically reduce certain jobs that will become unnecessary in this situation.
This is why interim management can be a solution for some establishments. Basically, using an interim manager avoids making long-term commitments, especially in these uncertain times. The interim manager is on hand as and when needed to meet expectations, and above all allows greater flexibility in the assignment of tasks and missions.
