What’s next? 🤔 Outside the regular programming
Certainly uncertainty has rooted within our minds and have begun to shine light upon fissures in our own companies, system and governments. Our lack of control over the situation are making travelers not plan any trips and us anxious if we will be able to continue given our own lack of preparation and reliance on purely reservation income. I’ve had a few conversations with other colleagues in the space, some are weathering the storm like us and others didn’t have as much luck as us, we’ve listened to big players also saying that they have had to close up shop. Now we can make whatever assumptions we want about the scenarios, players and outcomes, but, one thing is for sure nobody was ready for this. The ones who will survive this and be able to reap the opportunities of the new environment will be the ones that by chance could afford to weather the storm given their particular circumstances.
For example, Hostpitality will be one of those that will survive. Not because of the company being prepared, but, because of our current lean operations and low cost of operating. If we were to have acted upon our pipeline any sooner than expected (which we expected to on April) we would have probably been one of those that would have had to close and that is something worth thinking about. It’s worth the time for thought because if not for pure luck of waiting to execute we wouldn’t have been able to take the blow as well as we did. Particularly thinking within the context of what’s next, I’ve been deep in thought about what were the things that we could have really done to be prepared, and, quite frankly I still think my answers as far from adequate. Even though the strategies for mitigating losses in the short term would have worked, since other hosts are having relative success with them I still find that the answer for the long term escapes my grasp every time I think I’ve figured it out. It’s like a never ending chase!
So let me try to detail (at least as far as I can tell) what were the things we should have been prepared for:
Halt of your main source of travel traffic (No one visiting from there and you’re out)
Main income source decline (Not having any supplemental sources of income)
The inability to transit in your area (No work, no activities)
Bad debt collections (Being over leveraged)
High operating costs relative to the income (Willing to spend more because the going was good)
Since we haven’t reached the climax of the infection I would project that this will not be sustainable for most operators to continue and will have to close up shop probably defaulting on mortgages, rents, utilities and having to let go of a lot of their workforce if any (Vacasa and Sonder have already done so, Stay Alfred has not but, they aren’t working and without pay). Check out Transparent’s message on their impact to global supply page.
In simple terms this just means that hosts or operators are hanging on hoping they can catch some relief in high season, which will probably not happen. The two highlighted lines are key to really grasping the situation, 6 out of the 10 top short term rental countries in the world that constitutes 47% of the global supply and the next one there is likely to be significant impact at global level as we approach high season in many of them. Meaning as I’m interpreting it that close to 47% of the market are going to miss their high season or part of it also taking into account the ADRs that they will be having to rent at followed by uncertain reservations that could end up cancelling if something comes up or if it’s still not perceived as safe. Very troubling stuff…
In regards to what’s next? I don’t know what’s next, what to do or how will a bounce back strategy work just yet and we’ll all probably not know until the time comes and this is finally over. Be prepared to try new things, renegotiate your deals and internalize what we’ve learned from this to be able to survive another possible event in the future.
When I do figure something out and when I can give you a better sense of direction you will hear from me, in the meantime stay safe.
-Gian from Hostpitality
