Hoteliers in Spain weighing terms for reopening
The Spanish government is looking at reopening its economy, with one phase predicted to begin 1 July that will include hotels, but hoteliers want more clarification on the rules and an understanding of what assets require to at least break even.
REPORT FROM SPAIN—As Spain inches toward reopening its hotels, some hoteliers say the messaging is confusing, and they will decide when to open despite the government suggesting that can do so now, albeit with limitations and concessions.
Spanish Prime Minister Pedro Sánchez is lifting COVID-19 restrictions, including those pertaining to the operations of hotels, in four phases of a transition that started on 4 May and is due to end on 25 June.
It is thought that hotels could reopen in some phase of the plan, though sources said that would not include 100% of rooms due to the continued requirements for social distancing. A phased reopening certainly will include a proviso that only 30% of outdoor restaurant, bar, terrace and public space could be used, which sources added might not make economic sense.
Inmaculada Ranera, managing director for Spain and Portugal at business advisory Christie & Co., said in theory hotels have been allowed to operate as of 11 May, but there remains a great deal of ambiguity, mostly due to the lack of a vaccine for the virus.
“The government is working on measures that the hotels will need to respect, such as perhaps having one floor empty so that if there are coronavirus cases confirmed, there will be room to isolate and quarantine,” Ranera said.
Kike Sarasola, CEO of Madrid-based Room Mate Hotels, which operates 28 hotels, 16 of them in Spain, said he thought the government’s proclamations were not sufficiently precise.
“Fifty percent (of non-rooms space to be allowed to open) would help, but I need a minimum of 60% to 65% to break even, and the plans are so complicated we do not understand them completely,” Sarasola said.
He added he is not going to reopen Room Mate assets until the middle of June. Thirteen of his hotels around the world have been opened up to health care and essential workers through at least 31 May, and the chain has offered additional properties if needed.
“One-hundred percent occupancy by sanitary staff means all rooms are occupied. I understand the caution, but do not tell me I cannot open all my rooms,” he said.
Sarasola said the dots between the private and public sectors are not being connected.
“We want to help. The tourism industry has really helped when it has been needed. Tourism is one of the main factors in Spain, actually, number one, and without it the economy will not recuperate,” he said.
Isidoro Martínez de la Escalera, chief marketing and communication officer at NH Hotel Group, said he, too, saw the government’s proposal for de-escalation as being complex.
“There are paradoxes that need further clarification, such as the fact that in the second phase, hotels are authorized to open, but international and national travel between provinces is still banned. We are working on different scenarios for the re-opening of our hotels in Spain, given the limited visibility that the industry currently has,” he said.
Ranera said a successful reopening plan “might depend on the segment.”
“With 30%, some say this is like a joke, as restaurants cannot possibly cover costs. … The summer season is gone,” he said. “Some hotels were initially thinking of opening from September onwards, but the general sentiment in the Balearic Islands is not to open until next year. The Canary Islands enjoy a very strong winter season, so there is hope there, and urban hotels will likely to be the ones that will reopen between July to September.”
Room Mate has one resort hotel, in Magaluf, Mallorca, but that segment is likely to become a larger part of its portfolio, Sarasola said.
“Spain is among those countries that have been hit the hardest,” he said. “We saw the devil, and all of (the industry) will be much more conscientious moving forwards, doing things right, and we have to tell the guest that, that we know how to do it right.”
Sarasola said urban tourism will bounce back quicker as it is easier to use the room and go socially distance in a park, for instance, rather than a beach.
Demand will be hyper-localized, as international and interprovincial travel are not allowed in Spain in the new phase.
Sarasola said it is vital for the hotel industry, especially in Europe, to have a united vision for reopening.
“We should agree as to what are the minimum protocols as soon as possible, to have a minimum base. Each country can do something different, but there has to be a minimum in areas such as how to take a taxi, get on an airplane and enter a hotel,” he said.
Sarasola said while all realize mingling in the lobby will not happen in the foreseeable future, the room experience also is set to become noticeably different.
“The room will be what becomes your little paradise,” he said. “There will be all kinds of amenities, books, written notes, staff being very available. I am on the confident side that by August a medicine will have been produced that gives back reassurance to travel free. There will now be automatic check-in, but we still want staff there. We like eye contact.”
Ranera said the Spanish government will prepare additional legislation in cooperation with hotel representatives by the end of May that then will need to be approved by the health ministry.
She said some operators will be able to withstand the storm as the industry in Spain has enjoyed at least five years of good metrics.
“Their financial position is strong, and they are able to get credit lines and not diminish liquidity, but the general sentiment is that it will be between 12 to 18 months to regain a certain degree of normal activity,” she said.
Sources said the Northern Europe markets of Germany and, especially, the United Kingdom are critically important to the Spanish hotel industry and are hopeful that as more countries in the continent move to reopen their economies, the situation will improve.
“The hotel sector is by nature a business of stays away from home, and we will not be able to resume activity without free movement even if we speed up the implementation of all control measures to ensure the safety of customers and employees,” said NH’s Martínez de la Escalera.
Sarasola said he is confident in the future.
“We are completely on full mode on closing deals, looking at new opportunities. We have enough cash, and we want to open in England, the north of Europe, in Germany, places where we currently are not in. We’re on the lookout to buy, lease, rent, anything,” he said.