What Could Go Wrong?
What could go wrong? This question came from a conversation with a well-positioned and well-seasoned hotel developer, operator, and manager in the Pacific Northwest. Now, this is someone that I have great deal of respect for as a businessman and veteran of the hospitality industry. He knows the market and has good advisors in place to provide guidance and all signs pointed towards positive growth. Back in February 2020, we all felt this way.
Specifically, in the Pacific NW, we saw a huge increase in economic growth with massive amounts of construction in both Seattle and Portland. These major urban hubs were not alone, and this development cycle spread throughout secondary and tertiary markets in our region as well.
Then in March 2020, everything changed. Another client warned me about “this thing called the coronavirus” coming out of China back in January and it was just being discussed as a possible threat, but nobody could predict the impact it would have for us and the entire economy. Some have said this is worse than the last few recessions combined, but that probably depends on the news and data you choose to read or believe.
Since the outbreak of COVID-19, the world as we know it has changed. It has had an effect on every segment of the economy and every hotel has been hit in one way or another. Most have been damaged financially, but even for those lucky few that are still occupying their rooms with hotel guests the new world of cleaning and sanitation to make guests feel safe and secure (along with a hundred other necessary changes) are forcing operators to think fast on their feet.
It has been and continues to be a time of change for the entire planet. Often times change is good, brought on by stress that requires us to make adjustments to our business and lifestyle. Change means different things for everyone, whether it is repurposing your property, downsizing a portfolio, securing government assistance, or even opening a new hotel… hoping to capture the business that is still here.
This is a tough time for almost every hotelier we know. An owner of hotels recently told me that they are “shooting to break even, and if you can do that, you are winning”. Like many who are taking the time to read this, we have been through hard times before and we will make it through this COVID recession and come out stronger in the end.