Coronavirus May Drive Hotel Revenue Down 65% In The Second Quarter

It’s going to be a rough next two months in the U.S. It’s already rough in some parts of the world, and not just China, Italy, and South Korea. Singapore and Taiwan seem to be doing a good job containing the novel coronavirus. The U.S. has shifted from containment to mitigation.

World markets are down about 6% today as I write this. We’re in really uncertain territory predicting what’s going to happen to myriad businesses. Congress is considering recessing for two weeks, members are nervous, they skew much older than the general population.

Many businesses are going to shut down. Retail establishments can’t just work from home. Here in Austin South By Southwest was cancelled already. Eventually I imagine we’ll see closure of movie theaters. Will people go to restaurants?

Already we’re seeing a massive slowdown in travel. It’s scaring travel providers like United to do crazy things. Eventually they’ll need their customers when people travel again but for now United’s customers are the enemy.

How bad could things get for the travel industry? No one is certain, we’re taking stabs in the dark, but one scenario is that worldwide hotels could be down 65% in the second quarter.

As I evaluate my own travel I’m looking to the number of confirmed cases where I’m going, and the risk that it’s an area that could become subject to quarantine. I don’t want to be trapped somewhere, unable to get home to my wife and daughter. Sixteen million people are locked down in Northern Italy.

It looks like the U.S. has removed restrictions on testing. Tests are about to become more available. And we’re immune to the virus once we recover, that re-infection reports are probably of people who hadn’t actually cleared the virus to begin with. So there’s good news too.

(HT: @kbgny)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. “As I evaluate my own travel I’m looking to the number of confirmed cases where I’m going, and the risk that it’s an area that could become subject to quarantine. I don’t want to be trapped somewhere, unable to get home to my wife and daughter.”
    That’s the most reasonable thing I have read on travel blogs yet. Unlike the “I’m self grounding” “I”ve cancelled all my flights” Because of the tiny % chance you might get something? At least Gary weighs the chances and possibilities.

  2. Marriott has made an abomination of their rewards program, and when it comes to loyalty, what goes around comes around.

  3. “Singapore and Taiwan seem to be doing a good job….”. I would agree. But there are some other countries that are either not accurately reporting numbers or are not testing . A few of those countries have had travel warnings imposed on them, despite the fact they appear to have relatively few cases. Some tourists may visit them with a false sense of security/safety.

  4. Gary,

    Bright side is I will get some really cheap airfares and hotels. Most hotels can be cancelled w no penalty up until a few days before check in (prepaids obviously the exception) so no downside.

    Also retired and not worst case if I’m quarantined (or even get the virus since most are mild)

    BTW market is down mainly today on the oil price collapse and its potential impact on debt service, bankruptcy, etc. that is a much bigger risk than the virus.

    Finally on the virus, there is no cure for cold or flu (2 other Coronaviruses) so why do people think there will (or should) be one for this? Treatment and maybe vaccine is only option. Also I bet it is already widespread (if more tests were done) since typically mild, especially in younger and/or more healthy people, so could have been thought to be a cold (or maybe flu). Very few people have actually been tested. You and I are as likely to get it in a neighborhood setting as in most places around the world.

  5. So what does Marriott do during the corona virus
    they raise a one night redemption from 50,000 points to 70,000
    I have words for them and they aren’t kind nor making me interested in their rip off points currency to buy any rooms virus or no virus

  6. “So what does Marriott do during the corona virus
    they raise a one night redemption from 50,000 points to 70,000”

    If my employer starts prohibiting travel, I won’t be making Platinum this year and my three year streak will end. I actually view this as liberating, since I’ll no longer feel like I have to choose Marriott properties. The quality of their domestic lounges was getting cheaper, upgrades rarely happened, and many properties were finding reasons to weasel out of even the standard benefits. (“Sorry, no late checkout. This Fairield outside of Cleveland is actually a resort!).

    Since there’s no meaningful mid-level status for a “meager” 30-40 nights a year, I’ll have no regrets about saying bye-bye to Bonvoy.

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