Hotel room rates likely to remain stable

Despite Portugal’s hotel sector taking a hard hit from the Covid-19 pandemic, the price of hotel rooms is unlikely to suffer abrupt falls according to the Portuguese Hotel Association.

In an interview with the online news site ECO, Cristina Siza Vieira of the AHP admits that because of a lack of hotel room bookings the sector will have to adapt by adjusting prices through special campaigns, however price reductions are unlikely to be significant.
She believes that this year is all but lost for the hotel sector in Portugal and the recovery will be slow and uphill and numbers will not get back to normal for 18 months.
Siza Vieira says the association is looking at falls in bookings from between 80-90%, with the turnover of lost room nights from between 11.8 million (a fall of 80%) and 13.1 million (down 90%).
In revenue terms, almost 40% of hotel revenues come from events and meetings, and the fall off in income is therefore always extensive than by just looking at hotel room bookings.
According to a survey, the AHP estimates that by the end of the first half of 2020 the hotel sector will have lost between €1.28Bn (down 80%) and €1.44Bn (90%).
During the pandemic 85% of hotel staff were in layoff, with 94% of hotels admitting at the beginning of April to joining the layoff scheme. “But our estimate is that of the 60,000 full-time contracted staff around 51,000 were in layoff at the start of April and now around 90% are in layoff,” says Siza Vieira.
As to bankruptcies, the AHP says that some hotels have not closed their doors for good, but have applied for emergency credit lines. The first package has run out but the second line of credit was open for applications from 5 May.
The Government earmarked €600 million for restaurants and €900 million for hotel accommodation with high demand which means that there is an expectation that the lines of finance were used to sustain companies in this period.
The AHP president says that conditions are very difficult because on the one hand land borders are closed while it is hard to imagine the Spanish returning to Portugal soon despite an increasing willingness and although there is some air traffic, it remains limited.
“For June we have some hopes for the second fortnight, but it is expected to be modest nevertheless,” says Cristina Siza Vieira.