There are few industries that have been impacted more than the hospitality and tourism sector. Apart from a few hotels that serviced returning quarantined travellers many have had zero revenue for 3-6 months depending on which state they are located and are still operating below historical levels with most state borders remaining closed.
With depleted cash reserves, reduced asset values and international borders 10+ months away from opening who will make the distance to get to cashflow positive and eventually restoring asset values.
Owners and operators will have to navigate a bumpy road with most likely pockets of outbreaks of Covid continuing for some time. Also, the extent of assistance from Brands will be constrained with so many of their portfolio hotels seeking assistance and with many of the Brands having significantly reduced staff over the last 6 months.
Hotels will also need to devise new strategies to meet the evolving demand, in many cases they will need to be appealing to a different market than they previously have attracted. Be it hotels that historically attracted international guests needing to refocus on the domestic market, or regional accommodation that will be experiencing unprecedented high levels of demand from guests used to international service levels, or many other challenges of operating outside the norm.
The decisions of Owners and Financiers are critical in determining the ability to trade through the next couple of years and to fund the underperformance as businesses recover. But do they have the right strategy, who will be the winners, and therefore who are worthy of continued financial support notwithstanding breached covenants.
Should you require an assessment of your strategy or if you are seeking additional capital either from your bank or other sources, Axsia is able to assist in completing a strategic review for internal use or for 3rd parties such as lenders or investors. Furthermore, through our extensive domestic and offshore client base we can also access additional equity to bridge you through to full recovery.
