European Hotel Recovery Threatened by Lockdowns

If it turns into another winter of lockdowns and travel restrictions across Europe, then this would zap the performance of the region’s volatile hotel industry. 

Several of Europe’s largest countries moved in recent days to usher in a new wave of lockdowns and travel restrictions as mitigation against the Omicron variant. The Netherlands went into a strict lockdown, shuttering non-essential retail and schools, Sunday. Israel banned travel to the U.S. and Canada.

Germany, which already issued a lockdown for unvaccinated citizens, plans to roll out tighter capacity restrictions on indoor gatherings. 

France banned travelers from the UK without an essential purpose for their trip, and Germany also moved to ban most UK travelers from entering the country. The idea is to prevent the kind of surge of new cases seen in the UK.

However well-intentioned the lockdowns might be, they will almost certainly torpedo Europe’s hotel recovery efforts. 

Europe lagged China and the U.S. in the global hotel industry’s recovery from the depths of the pandemic to date. Hotel CEOs chalked it up to Europe’s stronger reliance on long-haul travelers to fill hotel rooms than China and the U.S., which both have larger domestic travel bases.

But Europe eclipsed China’s hotel recovery early last month and has held that position. China’s zero-tolerance approach to new cases is the main factor behind its downturn from a previous world-leading position in the recovery. 

China’s hotel industry ended November a one-fourth below 2019 performance levels, according to a Truist report that utilized STR data released Monday. Europe was 18 percent down, but there was a cautionary note included in the report. 

“November results do not consider what is likely going to be deteriorating demand into December and [the first quarter of 2022] given the Omicron variant impact and tightening public safety measures in many countries,” Truist reported. “Europe in particular should be more impacted in December results; China remains largely closed.”

U.S. President Joe Biden is expected to address the nation Tuesday night regarding the variant. The U.S. hotel sector has yet to show a massive impact on performance from the Omicron in weekly performance data, but analysts expect hotels relying more on business and convention travel to suffer.

The travel sector did get a bit of good news Monday with drug manufacturer Moderna reporting its booster shot significantly raises antibodies against the latest variant. Health officials on Sunday talk shows also stressed vaccinated travelers, especially those with booster shots, can carry on with holiday travel plans with family.

Dr. Anthony Fauci, chief medical advisor to the president, stressed wearing masks in airports and on planes as well as getting booster shots are crucial steps to having a safe holiday travel season.

“Nothing is 100 percent risk-free, but I think if you do the things that I just mentioned, you’d actually mitigate that risk enough to feel comfortable about being able to enjoy the holiday,” Fauci said Sunday on ABC News.