Opportunities in the European hotel sector

The COVID-19 crisis caused an unprecedented shock to the hospitality sector, write Graeme McCormack and Hugo Steen.

Across the board, operators experienced the largest revenue drops on record. Many encountered a cashflow crisis.

Those that survived did so thanks to the contribution of multiple stakeholders. Governments deployed a series of measures to cushion the impact of lockdowns; lenders provided liquidity through covenant waivers and loan guarantee schemes; and landlords offered to defer rent payments amid fear of tenants’ insolvency and empty premises.

Many hotel operators emerged from the crisis in relatively good health, ready to capitalise on a rebound in travel. Others, particularly those that went into the pandemic less equipped to absorb losses, such as independent owner-operators without deep pockets, emerged significantly weaker.

The current landscape presents discounted pricing opportunities for investors, as many owners are looking to se