Page 42 - March 2021

RLI LEISURE INSIGHT

A Return To Normal?

In this month’s leisure insight, Limestone Managing
Partner and Co-Founder Benjamin Habbel discusses
his thoughts on the hotel sector and how it will bounce
back after Covid-19 and what successful hotels have been
doing right during the pandemic.

Mediterranean Leisure wiLL outperforM Mediterranean wiLL rebound and
the rest of europe stay voLatiLe
With the UK Prime Minister Boris Johnson’s announcement Markets we have followed closely in particular are Italy,
outlining a roadmap for air travel and other aspects of the Spain and Portugal, markets where Limestone has built a
tourism industry to return to a new normal, the starting significant position of hotels already. Our belief is that it will be
shot has been fired. Hopefully, Angela Merkel and others will destinations like Lisbon, Milan, Rome, Capri, Venice, Mallorca,
follow suit very soon to offer their constituents, travellers Sardinia and other premium destinations with a very strong
and business alike, a similarly constructive roadmap. leisure offering that will benefit from the first wave of the
So what has happened since? Airlines and hotels have recovery the most. This is partly due to the fact that the
been showered in bookings following the announcement, Med’s high season is following shortly after travel restrictions
with airline ticket sales skyrocketing for Mediterranean are expected to loosen and some government programs
destinations and offering businesses a first reassurance that will run out. This can already be seen now, with sunny spots
the 2021 season isn’t lost. Easyjet ticket sales more than such as Malaga, Alicante and Palma in Spain, Faro in Portugal
quadrupled in the hours after the announcement, with a huge and the Greek island of Crete becoming top destinations for
portion going towards summer bookings. Holiday bookings EasyJet bookings, according to the carrier’s information. In
to Spain, Turkey and Greece jumped six-fold overnight, and contrast, business travel - particularly international business
Skyscanner reported that countries like Portugal are seeing a travel will continue to significantly lag behind luxury leisure.
176 per cent increase in bookings. Whereas leisure might recover to 2019 occupancy levels as
So, what is this early data set telling us? We believe this is soon as 2023 in some destinations, it might take another two
the early innings of a massive recovery in key segments of years longer for business hotels, according to our internal
the hospitality and wider tourism industry taking shape in analysis, to fully recover. Some individual hotels will never
front of our eyes. recover - as important capex investments have been stalled
Not only is it intuitive, that after months and months of and guest expectations are harder and harder to meet with
prolonged lockdowns across the European Union and the outdated inventory. For real estate valuations in the region,
UK, people are craving to travel again - but it is starting this means that prices will continue to vary a lot. Many
to show now in the demand data across the board. Many businesses are wiped out, creating distressed situations for
consumer segments have built up savings as other expenses risk-seeking investors, and others are at the end of their
have been put on hold, such as dining out. Demand during financing lines and are borrowing more to stay above water -
the lockdown was higher for anyone able to travel. Dubai which might end badly for some and create more investment
and the Maldives boomed over the winter break - and opportunities for lenders and investors.
average booking value increased as destinations that
offered a save and private travel experience was able to boutique hoteLs are winning
charge a premium. Luxury travel agents are reporting an Another thesis is starting to play out in the open. The small
average booking value increase of over 500 per cent for and lean boutique hotel is already emerging as the clear
their clientele over the last months. winner over large, institutionally run and often debt burdened
hotel complexes. It has been undifferentiated portfolios of
lower tier hotels that are seeing significant decreases in value,
while many individual hotels have been able to react quicker
and lower their operating expenses rapidly. As recovery sets
in, the performance of cookie-cutter concept hotels lacking
personality and a truly differentiated offering to guests will
have a hard time capturing the imagination of an audience
that has been scrolling through aspirational Instagram posts
for months, and are seeking a meaningful travel experience
to recover from the isolation of previous months.
Boutique hotels will be able to kick-start operations with
strong rates, knowing that the demand for less crowded
and more intimate hotels is increasing. The smaller boutique
hotels will be followed by many other segments step by step,
and over the coming months and years the market cycle will
play out. Nobody can predict the future, and certainly we
can’t either, but the signals are all pointing towards a strong
recovery for one of Europe’s largest industries - which will
be a win for everyone.
aethos Corsica
oletta, Corsica, france
42 RETAIL & LEISURE INTERNATIONAL MARCH 2021