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Hotels for sale is bad news? Maybe we ask 4 questions?

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white and grey quilt set

I know when a business closes down, it’s a negative news. I also know whenever a business closes down, people lose jobs. I also know when people loses their job, they will not have salary to support their life. Their livelihood is affected and if this situation continues, then soon their lives may also be affected.

Just look at what has happened in the US, many millions are facing the threat of eviction (click here to read the news if you like to know exactly what is happening and whether their government is doing something about it to help these people who may soon be sleeping on the streets) most probably caused by job loss during the worst times of Covid-19 previously.

So, yes, when hotels announce their closure, it’s a negative news too. However, many times, these negative news are temporary. As they say, we need to rest if we like to continue the journey of a thousand kilometres. Frankly, for example, when your hotel has 350 rooms and only 35 rooms are occupied everyday, it will be financially suicidal to keep it open.

However, whether it’s negative news for now or negative news forever and ever, we could also ask these 4 questions as below. The answers would provide a much better understanding about the future outlook. Famous military strategist, Sun Tzu said, “Victory comes from finding opportunities in problems.”

#1 – Are there buyers on the lookout for good deals? If we read frequently enough, we would know that there are always buyers on the lookout for hotels.

Examples? An image from theedgemarkets.com

Image from: https://www.theedgemarkets.com/article/cover-story-hotel-transactions-pick-near-term

Why do hotel transactions happen? The seller may prefer to have cash versus the hotel and the buyer prefers to have the hotel and willing to buy even under current negative times. Of course the only major reason is that the new buyer could see that the returns from their purchase will be realised in the near future.

#2 – Will these hotels reopen or it will be totally new development altogether?

If the closure is to ensure that the hotels will survive; reduction of the financial bleeding due to operations cost and yet no / low occupancy, then this is indeed a relevant strategy. Just need to note that not hotels which are closed are sold yeah. Some are just trying to hold on and quickly reopen then times get better. This is just business strategy and does not need to be applicable only to the hotels.

#3 – Will people stop travelling after pandemic becomes endemic? I can safely say that if they allow me to travel, I will travel. A staycation is fine, just need to have some change. If we look at countries which managed to handle Covid-19 well enough, as soon as travelling is allowed, the people just went travelling in droves.

Flights and hotels were booked well in advance when HK and Singapore signed a travel bubble previously. This tell us that travelling has not changed and new norm will still be the norm. People will continue to travel and they will always need accommodation. So, hotels, if they could survive the slow times will be rewarded with good times.

#4 – Will everyone stop staying in hotels?

This one is prompted by a friend who told me that he will no longer stay in hotels because there are so many choices in the AirBnB world. He is right. When I travel, I do stay in homestays and not hotels all the time. However, when I travel, my first choice is still to stay at hotels because I still feel hotel is safer, more welcoming and they offer services too.

There was once when I stayed in a very nice condo in Melaka. The facilities were amazing. However, as I walk back to my unit, the whole row only one unit is occupied. I am just not comfortable as my family was with me as well. I also prefer to just wake up in the morning and go down for breakfast versus waking up early and trying to find a place for breakfast in a place I have never been before. Haha. Not that adventurous maybe.

Hotels will always be needed, according to someone who has no money to buy up any hotel

Whatever the answer you provided to the 4 questions would be the answer you need. If they are all negative, then it does seem that the end for the hotels are very near. If the answers are positive, then I think when threats come, opportunities open up. I have no such funds lah. However, there are many companies with the extra funds to buy when the price is low and start receiving good returns once situation returns to normal. Happy answering yeah.

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