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Cancellation of major corporate events increases concern of long-term impact of coronavirus

02 March 2020 by
Cancellation of major corporate events increases concern of long-term impact of coronavirus

The cancellation or postponement of three major international conferences impacting the hotel and travel sectors has highlighted the damage the spread of the Covid-19 (coronavirus) virus is set to do to the global hospitality industry.

The three-day International Hotel Investment Forum (IHIF) was due to open in the German capital of Berlin today, while one of the world's largest travel trade shows ITB Berlin was scheduled to run from 4-8 March. IHIF at the Berlin InterContinental hotel has now been postponed until 4-6 May 2020. However, ITB Berlin has been cancelled until next year.

Meanwhile, Mipim in Cannes, France - one of the world's leading property markets which includes some hotel content – has been postponed until June.

While the postponement of IHIF may mean the delay to the announcement of some major hotel deals, the bigger concern is what will be the long term impact of the spread of coronavirus, which has now claimed the lives of more than 3,000 people worldwide, with a total of 86,000 affected?

Hotel industry consultant Melvin Gold said the postponement and cancellation of the hospitality, travel and property events are "symptomatic of global concerns" about the spread of the coronavirus. "The downturn in global stock markets signalled the risks, and specifically the fall in share prices of travel-related and hotel companies signalled market concerns of downturn in travel in both corporate and leisure segments," he explained.

"IHIF is typically a time when major deals or industry landmarks are announced or celebrated. These are mainly pre-negotiated prior to the event and it is consequently likely that those that are time-critical will still be announced in the near future. Some may be delayed until the rescheduled dates but in general if a deal is done and ready to announce that is likely to still take place."

Fellow hotel consultant, Russell Kett, chairman of the London office of HVS, agreed with Gold. "Anything which was already due to be signed in Berlin ought to be signed come what may, albeit with a few days delay perhaps."

However, Gold said that the greater concern is if deals not yet announced "unravel" because of concerns of a travel downturn. "It is too soon to know if that will be the case."

Kett said that while it is hard to judge what will be the impact on the wider confidence of the hotel industry, he advised operators to be "nimble" at this time before taking hasty decisions about the future.

"Many investors will most likely adopt a "wait and see" attitude, preferring to make micro (project) decisions once some of the macro geopolitical and economic issues become clearer. Underlying confidence about the sector is high and strong, but travel bans of whatever origin will quickly affect hotel performance especially in major gateways. If the weeks turn into months then some of the longer term fundamentals could be harshly impacted."

UK hotels look set to lose corporate business as a result of more companies preventing their staff from travelling, but there may be an upsurge in domestic bookings following on from fewer overseas leisure trips being made.

Gold said: "Critical to the whole situation from an industry perspective is how quickly concerns dissipate and at the moment it seems that better weather is more likely to remove the virus from the front pages than any medical cure. We can only hope that happens soon."

Joss Croft, chief executive of UKinbound, the trade body representing inbound tourism, urged members to be as "lenient as possible" with each other with regards to cancellation policies. "We know that when the impact of the virus improves, there will be a huge pent up demand for travel to the UK."

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