This is one of the main conclusions extracted from the 4th edition of Hot Trends, an event organised by Savills Aguirre Newman, which featured Manuel Butler, executive director at the World Tourism Organisation, who warned that «the decision making during these months will determine the coming decades and, as such, it is necessary to be well informed and for the governments and private sector to make the right decisions so that Spanish tourism can maintain its leadership».
Short impact and progressive recovery by segment
Based on the indicators from previous crises, analysts at Savills Aguirre Newman believe that the industry’s robustness and the global trend show that the impact will be short both in terms of time and geographically so that the sector’s recovery will accelerate as the months go by and it will take place by segment.
Nevertheless, a 24-month progressive recovery is expected. According to the consultant, there will be slight recoveries in the domestic leisure segment during 2020, but the break-even will not arrive this year. 2021 will be the starting year, with a recovery based on the probability of positive evolution of the virus, which will lead to a full recovery by the end of 2022.
Concerning the investment market, experts remark that it should remain solid, with a diversity of opportunities and depth for investors of different profiles. Savills Aguirre Newman points out that, in order to glimpse into the future of the capital market, three variables should be analysed: demand, financing and capital.
Experts assured that there is a type of investors who are very alert to the opportunities generated by the current situation, but those will be sporadic.
In terms of financing, analysts point out that it is directed towards working capital and the forecast is that it probably won’t be enough to cover new developments and projects and maybe even the short-term needs so that alternative financing could be a circumstantial solution, although on the short-term since it would demand very high returns right now.
In terms of capital, the consultant identified, before Covid-19, 30.000 million euro with investor interest within the hotel segment worldwide and remarks that the question is how to move that capital. In the short-term, it predicts movement in the leisure segment for the value-add profile, who is seeking opportunities with upside potential, and for the core and core+ profiles, the activity will be more limited until there is less uncertainty, although it will depend on each operation.
In the end, the capital and investment markets will demand a very high level of sophistication, with increasingly more complex financing which will require a high professionalisation within what will be a very limited window of opportunity.