Is 2021 bringing any optimism for hotel and casino industry?
It is clear that 2020 was an egregious year for the Hospitality and Casino industry. It is also quite clear that in 2021 we are entering a Purgatory period we are not completely sure how long will last.
There is no doubt that the arrival of vaccines brought some optimism, but we still don’t have a clear path in front of us on how to get out of the crisis.
The question remains – how close to normal will the industry manage to get in 2021?
Will Africa Regain Any of Its Tourism Rate?
At the Pan-African Virtual Hotel Club, held in October 2020, Wayne Troughton, CEO of HTI Consulting, stated:
“The impact of the COVID-19 pandemic on the African tourism industry has been both overwhelming and immediate. When comparing figures to last year, Q1 2020 saw a total of 67 million fewer tourist arrivals to African countries, coupled with a loss of $80 billion in export revenue and 100% of destinations imposing travel restrictions of some kind.”
Troughton also added that there are some reasons for optimism, as in the past few weeks we’ve finally begun to see reassuring signs as restrictions are lifted, international borders reopen and many hotels come back online. But what’s going on currently?
“Uganda performed like elsewhere in the world — badly.”
Jean Byamugisha, head of the Uganda Hotel Owners Association stated that “In 2020 the hotel business in Uganda performed like elsewhere in the world — badly. We had 80 percent cancellations of bookings, and also sent home about 57 percent of our staff on unpaid leave.”
But after being locked up for so long, many Ugandans decided to travel, and this led to a rise in demand for hotel rooms.
As far as local travelers are concerned, the biggest attractions are the Ssese Islands, an 84-island archipelago located in Lake Victoria. Many hotels there are reporting a 100 percent occupancy rate at the moment!
South African Hotels and Casino Resorts Facing Challenges
In South Africa, some hotels were closed due to the COVID crisis. One of the most prestigious hotels, the Hilton Durban, was the most recent to close, on January 11th. All this due to a decline in revenue.
Hilton’s two major competitors in South Africa, Sun International and Tsogo Sun, also faced significant financial challenges. Tsogo Sun saw its shares decline by more than 57%, and in the six months ending with 30 June 2020, Sun International’s consolidated income declined by 56%.
Hotels and Casino resorts like these, with places to eat, rest, and gamble, play a big part in the state economy and have no backup source of revenue. On top of their loss of revenue and jobs due to the closing of borders and strict measures, many regular casino visitors are also opting to play at online casino websites instead, where games can be enjoyed in safety. Some are afraid that if the crisis continues at this pace, it could spell the end for SA bricks and mortar venues.
Nigeria Facing Older Problems
Among other African countries, Sun International also has a presence in Nigeria. Their Federal Palace Hotel reopened but showed a very slow recovery.
But the Nigerian economy is facing problems older than the current crisis. The unemployment in Africa’s largest economy has risen for five consecutive years to about 14%. This prompted the government to launch a huge public works scheme to create jobs: about 750,000 young unemployed people will be offered three-month placements with a monthly salary of 20,000 nairas ($51) under the Special Public Works (SPW) program.
No Country Is Spared
Even across the ocean, in Nevada, US, the situation with Hotels and Casino Resorts is the same. They are hoping for a recovery in 2021, but are quite cautious about their expectations. President of the Nevada Resort Association, Virginia Valentine, is hoping that the “pent-up demand for the unique experiences only Las Vegas offers” will drive a second-half recovery in Nevada’s tourism-based economy.
While some lay their hopes into vaccines, analyst Jeremy Aguero said he will for sure know Nevada is in the clear “when it’s at 70 percent occupancy, when conventions have started to return, when there are more flights and when Monday night football games are packed with fans.”
2021 and the Road to Recovery
As far as Las Vegas is concerned, Beacon Economics founder Christopher Thornberg believes that by 2022 it will reach pre-pandemic levels for hotel occupancy and visitation, while some look further into 2023.
At the Pan-African Virtual Hotel Club, the same kind of cautious optimism was echoed: “African hotels can expect significant uncertainty during the transition period. Whilst preparing for the comeback, industry professionals must not forget one fundamental rule that built their past success: knowing their guests’ concerns, adapting operational processes to new market requirements, and continually building competitive advantage around them”.
Just how long will it take us to reach the other end of the Purgatory of 2021 is still unclear.
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