Hotels in Asia increasingly worried as debts mount

Andrew J Wood

 

Bangkok’s bustling skyline - Jones Lang LaSalle reports from Thailand that hotels across the region are under extreme financial stress as they face operating with reduced occupancies for the foreseeable future

 

BANGKOK: Hotel property owners across Asia are increasingly turning to creative financing solutions to ride out near-term turbulence. Owners are seeking greater access to debt financing to bolster cash flows as they face an unprecedented period of historically low occupancy rates, closed borders and severe limitations on air travel due to the ongoing COVID-19 pandemic, says JLL. 

 

The impact of the virus on the hospitality industry across Asia continues to be significant, with many hotels and investors witnessing an unparalleled cash crunch as much reduced revenues struggle to offset fixed costs.

 

According to JLL’s Hotels & Hospitality Group executive vice president Adam Bury, and senior vice president Corey Hamabata, travel restrictions are forcing owners to look at an array of short-term financing options, this temporary dislocation is expected to also create new opportunities. 

 

They warned that hotels are struggling to break even, much less cover their debt service obligations, leaving owners to fill the gaps. As the hotel industry is typically the fastest to rea

 

However there are growing signs of financial stress among Asia’s hotel owners: 

 

• insufficient cash flow to cover existing obligations leading to short-term measures that include furloughing staff and accepting quarantined guests
• traditional lending channels being unavailable and curtailed
•  
• owners are the most concerned about long recovery periods and the return of normal airport/airline operations
•  
• resorts are reliant on a high proportion of international guests – a segment which maybe the slowest to recover
•  
• the need to restructure loans, including the provision of short-term grace periods
•  
• finding lenders who are likely to fund non-performing assets to cover longer-term shortfalls

 

Whilst it may be too soon to determine the eventual recovery period for the hotel industry, short-term grace periods may simply not be enough to help many owners navigate the current situation and additional capital will likely be needed to fill the gap.

 

However limited and short financing options are expected to be attractive for Thai hotel owners to stay afloat. Especially if international travellers continue to be unwilling or unable to travel. 

 

“The country’s major tourist destinations rely heavily on international tourists. Historically, international tourists comprised  60% to 85% of visitors to popular destinations such as Bangkok, Phuket and Koh Samui,” says Bangkok-based JLL Hotels & Hospitality Group.

 

-- 2020-05-13

Just the tip of the iceberg.

 

Thailand has millions who are destitute.  And, business' that are barely staying open.  What's going to happen when they all run out of money and jobs.

 

The hotels are the least of the problem.

10 minutes ago, Is this real said:

Just the tip of the iceberg.

 

Thailand has millions who are destitute.  And, business' that are barely staying open.  What's going to happen when they all run out of money and jobs.

 

The hotels are the least of the problem.

The hotels are a significant part of the problem because they employ, or employed, many of those who have become destitutes.

 

The longer they remain closed, the deeper the economic and financial crisis gets.

3 hours ago, webfact said:

They warned that hotels are struggling to break even

Can't see ANY hotel breaking even -  i think the only ones in the uk making money are the ones currently housing the homeless and claiming off the taxpayer 

Maybe hotels in BKK will reduce their take rates.  I think for 50$ US you should be able to get a very nice room  in a nice location.   I have used  Airbnb  so much last 4 trips. 1400-1700 baht gets you so much more than most hotels offer.   And i stayed 10 days at a clean  hotel  25 mins from  district 1 in Saigon for 7$/ nt.  

19 hours ago, webfact said:

Bangkok’s bustling skyline - Jones Lang LaSalle reports from Thailand that hotels across the region are under extreme financial stress as they face operating with reduced occupancies for the foreseeable future

My hearts bleeding...

Did they not save for a rainy day when they had an avalanche of visitors in the last decade ?