Hotels urged to repurpose to avoid closure, asset sale

MANILA, Philippines — As the hospitality industry continues to reel from the impact of the pandemic, more hotels may face closures or the sale of their properties if they are unable to repurpose, a real estate services firm said.

“With no clients coming in because of the lockdowns and travel restrictions, we might see more hotels probably closing if they are unable to repurpose,” Santos Knight Frank (SKF) research and consultancy head Jan Custodio said in a virtual media briefing.

Custodio said it is difficult to operate a hotel with occupancies declining to as low as 10 percent.

“Normally, hotels operate at 50 to 60 percent, the bigger hotels are doing 75 to 80 percent occupancy year round. So the significant drop will definitely result in serious revenue losses,” he said.

Apart from temporarily halting operations, SKF director for investment and capital markets Kash Salvador said some hotels are also expected to put up their properties for sale.

SKF chairman Rick Santos emphasized that the recovery of the hospitality sector really depends on factors such as the guidelines issued by the Inter-Agency Task Force and when certain visitors would be allowed entry again into the country.

As the sector remains affected by travel restrictions, SKF noted that hotels have also adapted to the changes by repurposing their properties.

SKF associate director and head of residential services Kim Sanchez said there are a number of mid to high-end hotels offering their accommodation facilities for long-term stay as an alternative work-from-home setup.

“Compared to other countries, the Philippines has a challenge with internet connectivity, so it’s more appealing for huge companies and multinational corporations to house their staff in hotels or in a better work-from-home setup where they can engage more easily with their staff,” Sanchez said.

Moreover, Santos expressed optimism for the hotel and tourism industry in the future, emphasizing that these industries would be reshaped.

“I think tourism will definitely return, I think there will be a question mark around business travel and how that is handled and managed. But tourism definitely will return. It’s a matter of what happens post-COVID. There will be some changes to business travel, business meetings, conventions, those kinds of stuff,” Santos said.