Fitch Ratings: New COVID-19 variants to delay lodging recovery in 2022

NEW waves of COVID-19 variants have delayed revenue per available room recovery for the lodging sector worldwide.

According to Fitch Ratings, while such metric of sector performance will improve in 2022, it will remain around 30% below pre-pandemic levels.

“The recovery phase will last another four years with the US leading the rebound,” the rating agency pointed out in a non-rating action commentary on Global Lodging Outlook 2022. “Regions like Southeast Asia which is largely dependent on the return of international visitors and Europe are lagging behind.”

As the hotel and leisure sectors remain among the most affected from the pandemic with long-lasting consequences, Fitch Ratings forecasts an improving outlook in 2022 barring a reinstatement of new pandemic-linked travel restrictions.

“Leisure trips with a domestic focus in regional areas will continue supporting the turnaround, while business travel and events will be on a slower recovery path,” observed the rating agency.

“The economy segment should remain strong in occupancy although pent-up demand is also boosting luxury experience and interest for ‘once-in-a-life trips’.”

According to Fitch Ratings, last-minute bookings will remain a dominant trend as long as unharmonised border restrictions continue. “Longer stays due to work flexibility and incipient environmental awareness in decision-making are trends to consolidate in 2022,” noted the rating agency.

While most hotels remained open in 2021, the experience gained in 2020 with growing cost flexibility and pricing discipline as well as some retained public support has helped diminish losses.

“However, growing inflation, labour market pressure and sharper competition from short-term rentals will pose new challenges to keeping profit recovery on track in 2022,” added Fitch Ratings. – Jan 12, 2022

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