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Execs Say US Cruises Could Restart, Based on Success in Europe

Cruise industry stakeholders in the U.S. are optimistic that cruising’s largely successful restart in Europe bodes well for the American cruise industry.

Cruise executives have cited this European precedent in their efforts to get the U.S. Centers for Disease Control and Prevention (CDC) to lift its ‘No Sail Order,’ which is currently set to expire on September 30, but which many expect will be extended following the agency’s review. The deadline to respond to the CDC’s request for public input about the potential resumption of large- and small-ship cruising is just days away, reported Travel Weekly.

MSC Cruises and Italian line, Costa Cruises, resumed activities in August and early September at limited passenger capacities, with strict health and safety measures in place and starting with one ship each. Both now plan on launching second ships to continue sailing the Mediterranean.

Such smaller-ship operations as Hurtigruten, SeaDream Yacht Club and Ponant Cruises had already been operating in Europe, beginning as early as June. Among them, only Hurtigruten reported a large-scale COVID-19 outbreak, which occurred in August and forced the company to suspend sailing on all three of its ships.

Hurtigruten’s CEO, Daniel Skjeldam, issued an apology and attributed the onboard infection to weaknesses in the cruise line’s internal processes. It turned out that crew members from the Phillippines had been COVID-tested prior to departing their country, but weren’t re-tested upon arrival in Norway, prior to boarding the ship, and infected individual(s) must have slipped through.

Norwegian Cruise Line Holdings CEO Frank Del Rio told Miami-Dade County officials earlier this month that the cruise industry’s recent successes in Europe ought to prove to the CDC that U.S. cruise lines could also safely resume service, as long as the proper protocols are in place.

“We are so happy to see MSC and Aida and Costa cruise in Europe,” Del Rio said. “It proves it can be done. I am 100% certain our protocols are second to none and it will be safe to cruise from America.”

Rick Sasso, chairman of MSC Cruises USA, told lawmakers that the European arm of MSC Cruises, “shows that cruising can be done safely. The protocols we put in place for our first cruises in Europe are working effectively.” He pointed to the “close collaboration” of MSC and European authorities as a key element of coming up with effective protocols and standards. “We are ready to work with authorities in the U.S. directly to plan for a safe and successful start of cruising in the U.S.,” Sasso said.

Cruise executives and health experts have also postulated that cruise lines are now better prepared to identify and isolate infected passengers, and, in at least four cases, one passenger had come down with COVID-19, but the virus didn’t spread to anyone else onboard.

“That ability to contain an infection if one occurs on a ship is critical,” Dr. Jewel Mullen, an associate dean at the University of Texas Austin’s Dell Medical School and an advisor to Carnival Corp. “I think it’s really encouraging to see no subsequent spread.” She opined that a successful cruising restart would depend upon a combination of testing, onboard protocols (and the willingness to observe them) and what passengers do during the fourteen days before and after a cruise, even if they are asymptomatic.

Source: https://www.travelpulse.com/news/cruise/execs-say-us-cruises-could-restart-based-on-success-in-europe.html

More Than 50%of Global Destinations Are Easing Travel Restrictions – but Caution Remains

A majority of destinations around the world (53%) have now started easing travel restrictions introduced in response to the COVID-19 pandemic. Though many remain cautious in view of the development of the pandemic, the seventh edition of the UNWTO “COVID-19 Related Travel Restrictions: A Global Review for Tourism” confirms the ongoing trend towards the gradual restart of tourism.

Analysing restrictions up to 1 September, the research carried out by the United Nations specialized agency for tourism found that a total of 115 destinations (53% of all destinations worldwide) have eased travel restrictions, an increase of 28 since 19 July. Of these, two have lifted all restrictions, while the remaining 113 continue to have certain restrictive measures in place.

UNWTO Secretary-General Zurab Pololikashvili said: “Coordinated leadership and enhanced cooperation between governments means tourism is slowly but steadily restarting in many parts of the world. Starting to ease restrictions on travel opens also the doors for tourism’s social and economic benefits to return. While we must remain vigilant and cautious, we are concerned about those destinations with ongoing full travel restrictions, especially where tourism is a lifeline and economic and social development are under threat.”

Deepening tourism intelligence

Coordinated leadership and enhanced cooperation between governments means tourism is slowly but steadily restarting in many parts of the world

For the first time, the COVID-19 Related Travel Restrictions report includes key data on the health and hygiene infrastructure in place at destinations, while also analysing rate of notifications of new COVID-19 cases. This allows UNWTO to determine the factors that are influencing destinations’ decisions to ease restrictions. Notably, the report shows:

Destinations which have eased travel restrictions generally have high or very high levels of health and hygiene infrastructure. They also tend to have comparatively low COVID-19 infection rates.Within advanced economies, 79% of tourism destinations have already eased restrictions. In emerging economies, just 47% of destinations have done so.64% of those destinations which have eased have a high or medium dependence on air as a mode of transport for international tourism arrivals.

At the same time, the report shows that many destinations around the world are extremely cautious about easing travel restrictions they introduced in response to the pandemic and some have passed severe measures in an attempt to keep their citizens safe. 93 destinations (43% of all worldwide destinations) continue to have their borders completely closed to tourism, of which 27 have had their borders completely closed for at least 30 weeks.

Furthermore, more than half of all destinations with borders completely closed to tourism are classified as being among the World’s Most Vulnerable Countries. They include 10 SIDS (Small Island Developing States), one Least Developed Country (LDC) and three Land-Locked Developing Countries (LLDCs). More than half of destinations with full restrictions still in place are also highly dependent on aviation, with at least 70% of their tourist arrivals coming by air, causing significant connectivity impacts for their citizens and economies.

UNWTO continues to monitor the impact of COVID-19 on the tourism. From the start, the UN specialized agency has advised that the situation is fluid and that, even as tourism restarts in some regions, in others, restrictions may be tightened and borders re-closed. Similarly, UNWTO has observed a rise in travel advisories being issued by governments for their own citizens, alongside more and varied restrictions and other measures directed at passengers arriving from specific countries or regions. 

Source: https://www.hotelnewsresource.com/article112420.html

From High-touch to No-touch: How Hotel Guest Experience Has Changed?

A lot has changed in these few short months. What has not changed is your guests’ expectation to be wowed by your experience and service.

It used to be that guest experience was a key differentiator in a sea of sameness. Now the challenge is not just to meet your guests’ expectations but to adapt to new ways to surpass and exceed them.

Having robust health and safety guidelines is given. You will win lifelong loyalty by demonstrating your authenticity in adopting this change and making your guests feel safe.

For instance, a major American airline turned back a flight when passengers refused to wear masks.

Before we look at what guest experience looks like in a world of Coronavirus, let’s look at

What is guest experience means?

Guest experience is more than the service you offer when a guest walks through your front doors. It’s the first time they’re even aware of your property or your brand. It starts with the brand awareness and their experience with that brand, specifically. And it continues through their entire customer journey, from booking their room to checking in and checking out, and even long after their stay when they’re considering another visit.

Why guest experience matter?

Your guests are a powerful marketing tool. In this age of online reviews, especially as guests seek trusted and safe experiences due to COVID-19, a recommendation from someone who has stayed with you goes a long way to build trust and credibility.

Tips to deliver stellar guest satisfaction and experience in the times of COVID-19 are: 1 Focus on hygiene and cleanliness:

Hygiene practices and procedures are a key selling point. Potential guests want to know the measures that have been implemented and that their health and wellbeing have been prioritized. These measures must be communicated in advance via all available online channels such as your website, social channels, and listings on OTAs. Equally, display the new hygiene standards – including expectations from guests to adhere to these – through clearly displayed signage on-premise.

Make sure your health and safety guidelines always adhere to the local government advice. More importantly, it is critical to train your staff on these new policies. Giving rooms a good clean after a check-out, even “rest time” between bookings is becoming common as more stringent health measures are adopted.

2 Be flexible:

Uncertain times call for greater empathy from hoteliers. This empathy, in the form of flexible cancellation policies, will earn you loyal guests. You could get creative with your cancellation policy by offer guests gift cards when they change or cancel non-refundable bookings.

3 Adopt a contactless service model:

Driven by a need to be socially distant, contactless service is not just appreciated – it is expected. Introduce online check-ins and check-outs. Upgrade your point of sale system to be speedy and mobile. Take payments via a virtual payment gateway link pre-arrival to avoid handling of cash or credit cards by staff. Longer-term, you may even want to consider keyless entry activated via mobile apps.

4 Guests want tech-savvy accommodation:

Guests expect hotels to be keeping up with technology. A presence on social media channels, such as Facebook or Instagram, is vital, especially for up-to-the-minute updates. They expect hoteliers to deliver a contactless experience without compromising on quality. A hospitality world where the Internet of Things (IoT) is embraced through products such as Alexa, Google Home, smart lighting, etc to minimize touch is being further defined in this era.

5 Focus on in-room facilities:

As guests avoid common areas to avoid overcrowding, they spend more time in their rooms. Make sure it has all facilities needed. If you’re welcoming business guests, check that they have everything needed to work comfortably from their room. Widen your dine-in menu as they may be favored over buffets and restaurant service.

6 Personalized experience:

Contactless does not mean non-personal service; personalization is the key to making your guests feel special. If you’re welcoming a returning guest, make the check-in quicker by using details from the previous booking. Smile, even if it is hidden behind a mask. If the guest has stayed with you before, use what you know of them to customize the current visit. At the very least, leave a welcome message.

Conclusion

This is a pivotal moment. What we’re creating now is history. How we react now will impact us in the years to come.

While the pandemic has brought change and unfortunate times for the travel and hospitality industry, it presents an opportunity like never before. You have the option to rebuild your brand to be more customer-focused and digitally-led to achieve the responsiveness of start-ups and digital natives while tapping into the data and tools that you already have. And when you do this, you will be able to deliver an experience that will surpass the expectation of your future guests.

Source: https://www.hotelnewsresource.com/article112407.html

UNWTO Highlights Potential Of Domestic Tourism To Help Drive Economic Recovery In Destinations Worldwide

As restrictions on travel begin to ease globally, destinations around the world are focusing on growing domestic tourism, with many offering incentives to encourage people to explore their own countries. According to the World Tourism Organization (UNWTO), with domestic tourism set to return faster than international travel, this represents an opportunity for both developed and developing countries to recover from the social and economic impacts of the COVID-19 pandemic.

Recognizing the importance of domestic tourism, the United Nations specialized agency has released the third of its Tourism and COVID-19 Briefing Notes, -Understanding Domestic Tourism and Seizing its Opportunities.- UNWTO data shows that in 2018, around 9 billion domestic tourism trips were made worldwide – six times the number of international tourist arrivals (1.4 billion in 2018). The publication identifies ways in which destinations around the world are taking proactive steps to grow domestic tourism, from offering bonus holidays for workers to providing vouchers and other incentives to people travelling in their own countries.

Domestic tourism to drive recovery

UNWTO Secretary-General Zurab Pololikashvili said: “UNWTO expects domestic tourism to return faster and stronger than international travel. Given the size of domestic tourism, this will help many destinations recover from the economic impacts of the pandemic, while at the same time safeguarding jobs, protecting livelihoods and allowing the social benefits tourism offers to also return.”

The briefing note also shows that, in most destinations, domestic tourism generates higher revenues than international tourism. In OECD nations, domestic tourism accounts for 75% of total tourism expenditure, while in the European Union, domestic tourism expenditure is 1.8 times higher than inbound tourism expenditure. Globally, the largest domestic tourism markets in terms of expenditure are the United States with nearly US$ 1 trillion, Germany with US$ 249 billion, Japan US$ 201 billion, the United Kingdom with US$ 154 billion and Mexico with US$ 139 billion.

Initiatives to boost domestic tourism

Given the value of domestic tourism and current trends, increasing numbers of countries are taking steps to grow their markets, UNWTO reports. This new Briefing Note provides case studies of initiatives designed to stimulate domestic demand. These include initiatives focused on marketing and promotion as well as financial incentives. Examples of countries taking targeted steps to boost domestic tourist numbers include:

  • In Italy, the Bonus Vacanze initiative offers families with incomes of up to EUR 40,000 contributions of up to EUR 500 to spend in domestic tourism accommodation.
  • Malaysia allocated US$113 million worth of travel discount vouchers as well as personal tax relief of up to US$227 for expenditure related to domestic tourism.
  • Costa Rica moved all holidays of 2020 and 2021 to Mondays for Costa Ricans to enjoy long weekends to travel domestically and to extend their stays.
  • France launched the campaign #CetÉtéJeVisiteLaFrance (‘This Summer, I visit France’) highlighting the diversity of destinations across the country.
  • Argentina announced the creation of an Observatory for Domestic Tourism to provide a better profile of Argentine tourists.
  • Thailand will subsidize 5 million nights of hotel accommodation at 40% of normal room rates for up to five nights.


Source: https://www.hospitalitynet.org/news/4100617.html

Airbnb to Take the Supermarket Approach for Post-COVID Success

As a hugely successful and globally influential accommodations company, it is only natural that the press has zeroed in on this sharing economy juggernaut during the topsy-turvy news cycle of the COVID pandemic. But just because Airbnb had massive layoffs during the spring months and is pivoting towards long-term rentals does not mean that you should count this entity out as a direct competitor for your ‘traditional’ hotel.

In fact, Airbnb will likely end up leaner and meaner as a multi-purpose accommodations provider by this time next year. To understand why, consider what makes the average consumer opt for going to the supermarket versus a collection of specialized grocers.

True, the platform is still a bit on the ropes, at least as it concerns our brands. Superhosts and their ghost hotel units were devastated by the lockdown as their high monthly fixed costs forced many of them to shift inventory from short-term rentals into the long-term market; and once it’s in this latter pool, a unit is hard to swap back. Many also point to what on paper is the spectacular failure of Airbnb’s experiences vertical. Together, this could be seen as less overall competition for hotels moving forward.

But look closer and you’ll see that this accommodations juggernaut is setting itself up to become a more versatile platform for just about any form of non-purchasable living space a customer could want. This is why the supermarket model works – in a word, convenience.

Some consumers will want to go to their independent fruit market then to an organic butcher followed by a bakery or fromagerie, likely because the goods are of higher quality, made by niche producers and they can interact with trusted personnel to take advantage of their recommendations. But visiting all these separate entities takes time and there is no guarantee that such specialized shops will have everything that a certain individual needs at that exact moment. So, you go to the supermarket to get your fruits, vegetables, meats, bread, cheese and sauces; and just in case you also need more toilet paper, they have that on aisle three.

In this sense, it’s not just about the convenience itself but the guarantee of this convenience. One reason you go to a supermarket is that products that aren’t necessary on the weekly shopping list but are nonetheless available will ‘halo’ back onto whatever items are sought after on that particular shopping day. As ‘the everything store’, Amazon has also derived much of its success from this model in that you can buy books, gardening tools, dried spices and underwear all at the same time and all without leaving your home.

Applying this psychological foundation to Airbnb, the experiences vertical makes perfect sense even if it’s unprofitable on paper for the first few years after launch. The company’s core revenue generator is selling the equivalent of hotel rooms – staying to stay in desirable locations – and, like visiting a supermarket, even just the possibility of also purchasing experience to coincide with a short-term reservation means more customers will be drawn to utilize this platform over others.

Hence, with each new gross functionality added to Airbnb, it has more spokes on its wheel to keep the center cap of short-term accommodations spinning. Therefore, developing a long-term rental platform will benefit the company in the same way as it will mean more eyeballs going to the website and using the app, spurned on by the convenience of ‘one stop shopping’. And once people are comfortable with using the interface to find what they want, new habits will be formed and will be ever-harder to break.

Key for traditional hotels to grasp from all this is that a resurgent Airbnb after COVID will mean even more users on its platform than before the pandemic, which will inevitably result in a revived fight against ghost hotel operators, albeit in a few years once their liquidity has stabilized. Hence, we hoteliers must continue to push for a level playing field once the more immediate concerns of reshuffling our operations to meet the demands of the next normal are addressed.

Furthermore, consider how the supermarket analogy can work to your brand’s favor. If your primary business is derived from selling rooms product, then what ancillary services can you add to halo back onto this central revenue generator? This will be an interesting question to answer in the immediate pandemic aftermath as many costly operations that would give you this halo in a conventional sense – like a spa or restaurant – may no longer motivate guests, at least in the near-term. Remember to look for features or amenities that are relatively inexpensive, even when poorly utilized by guests, but will help draw people to consider your property in any top-of-funnel search.

All told, Airbnb is here to stay and is working to swiftly adapt to the challenges presented by COVID so that this lodging platform remains a competitor for traditional hotel brands for many years to come. For your hotel, there are many things you can learn from this company so that you are better prepared to capitalize upon the post-pandemic travel surge with the supermarket model being just one of them.

Source: https://www.hospitalitynet.org/opinion/4100149.html


UK’s easyJet cuts capacity as quarantine restrictions widen

British airline easyJet is reducing its flying schedule after demand has been hit by frequent changes in government restrictions on travel, including quarantine measures.

The airline said on Tuesday it expected to fly slightly less than the previously planned 40 percent of capacity in the three months ending Sept. 30, its fiscal fourth quarter, and that it could not give earnings guidance for either this or next fiscal year.

It had said only last month that it had been encouraged by higher-than-expected bookings following the easing of coronavirus-related restrictions, and as a result had decided to expand its schedule for the current quarter.

England has imposed a 14-day quarantine on arrivals from countries including France and Spain, and it added seven Greek islands to the list on Monday. Other countries in the United Kingdom have taken similar measures.

“Following the imposition of additional quarantine restrictions to seven Greek Islands and the continued uncertainty this brings for customers, demand is now likely to be further impacted and therefore lower than previously anticipated,” easyJet CEO Johan Lundgren said.

“We know our customers are as frustrated as we are with the unpredictable travel and quarantine restrictions,” he added.

Shares in easyJet, which have lost 55 percent of their value since the start of 2020, were down 6 percent at 591 pence in early deals.

Lundgren said it was difficult to overstate the impact on the industry of the COVID-19 pandemic and associated government policies.

He said the aviation sector needed specific support, including the removal of air passenger duty for at least 12 months and the alleviation of air traffic control charges.

EasyJet is cutting 4,500 jobs across Europe and is closing its bases at London Stansted, London Southend and Newcastle airports as a result of the pandemic. 

Source: https://www.thejakartapost.com/travel/2020/09/08/uks-easyjet-cuts-capacity-as-quarantine-restrictions-widen.html

England introduces virus quarantine for Greek islands

England on Monday added seven Greek islands to its coronavirus quarantine list, but the mainland remains exempt, as the government seeks a more targeted way to limit new cases from abroad.

Transport Secretary Grant Shapps said anyone arriving from Lesbos, Tinos, Serifos, Mykonos, Crete, Santorini or Zakynthos from 0300 GMT on Wednesday must self-isolate for a fortnight.

At the same time, Britain’s foreign ministry warned against all but essential travel to the seven islands, many of the popular destinations for British tourists, particularly young people.

The UK began introducing quarantine in June as one way to stop new infections of coronavirus, which has killed more than 41,500 people — the worst death toll from the pandemic in Europe.

But changes made with little notice and confusion over different policies in different UK nations — notably England and Scotland — sparked anger in the travel industry and frustration among tourists.

Shapps said quarantine measures could not be targeted at specific regions within countries as there was too much movement between high and low risk areas, but islands had natural boundaries.

“Through the use of enhanced data, we will now be able to pinpoint risk in some of the most popular islands, providing increased flexibility to add or remove them — distinct from the mainland — as infection rates change,” he said.

Scotland has introduced quarantine measures for arrivals from the whole of Greece, while Wales also has restrictions on six islands.

Source: https://www.thejakartapost.com/travel/2020/09/08/england-introduces-virus-quarantine-for-greek-islands.html

Taj Mahal to reopen even as virus rages in India

A low number of tourists are seen at Taj Mahal amid concerns over the spread of the COVID-19 novel coronavirus, in Agra on March 16, 2020. (AFP/Pawan Sharma)

India’s top tourist attraction the Taj Mahal is set to reopen more than six months after it was shut, officials said Tuesday, even as the vast nation battles soaring coronavirus infections.

India, home to 1.3 million people, on Monday overtook Brazil to become the world’s second most-infected nation with more than 4.2 million cases, behind only the United States.

“The Taj Mahal will reopen on September 21. All COVID-19 protocols, like physical distancing, masks will be followed,” northern Uttar Pradesh state’s Tourism Department deputy director Amit Srivastava told AFP.

Visitors will be limited to 5,000 a day, down from the usual daily average of 20,000, he added.

One of the New Seven Wonders of the World, the shining marble mausoleum south of the capital New Delhi has been closed since mid-March as part of India’s strict virus lockdown.

Uttar Pradesh, home to Agra city where the Taj is located, is one of the worst-hit states in India with more than 270,000 virus cases recorded so far.

India has pushed ahead with reopening to boost its virus-battered economy even as infections have steadily increased.

Since August, India has been reporting the highest single-day rises in the world.

Resumption of tourism between China and Thailand ‘not happening any time soon’

A senior official of the Chinese embassy in Bangkok has ruled out early reopening of tourism between China and Thailand, as the two countries are not ready to open the sector.

China has been recently reopening for domestic tourism, but has not yet welcomed foreign tourists, or urged Chinese people to travel abroad, said Yang Xin, minister counsellor and deputy chief of mission at the Embassy of the People’s Republic of China to Thailand.

Even Chinese tourists want to visit Thailand, but Thailand is unlikely to open for foreign tourists, he said in an exclusive interview to Nation Multimedia Group.

The Thai government has not yet reopened the tourism sector, as it was still worried about potential import of new COVID-19 cases. The government only plans to allow first 200 long-stay tourists to enter the country next month. About 10 million Chinese tourists visited Thailand annually in recent years out of some 40 million every year.

Yang said that China was currently reopening travel for business persons who could apply for fast lane clearance when they enter China for doing business. Foreign business persons are not subject to 14-day quarantine but they can visit only limited places essential for their business activities.

He said the Chinese government has managed to control the COVID-19 outbreak and now schools nationwide have been reopened after they were closed for eight months.

China this year has not set a target for economic growth but would focus on job creation and people’s living standards, he said.

The government has implemented many stimulus packages to support people and businesses especially small and medium-sized enterprises, said Yang.

Regarding Hong Kong, Yang said that the special administrative region had returned to stability following the enforcing of the security law. He reiterated that China wants to maintain the one country, two systems principle,  but foreign interference was trying to create a two-country system.

As for the Thai government’s decision to defer the purchase of two more China-made submarines, Yang said the ties between the two countries has deepened and widened to many areas. He added that officials from both sides are working closely together on the submarine deal and will continue doing so. 

Source: https://www.thejakartapost.com/travel/2020/09/08/taj-mahal-to-reopen-even-as-virus-rages-in-india.html

Accor-IHG: the hotel tie-up that never gets booked

Bryce Elder AUGUST 22 2020

Nothing is more powerfully frustrating, to misquote Victor Hugo, than an idea whose time will not come.

One of those familiar ideas came back around this week. Hotels group Accor of France has been working on a takeover of London-listed InterContinental Hotels to create the biggest company of its kind in the world, Le Figaro reported. As yet, Accor has not made an approach, the paper said; Sébastien Bazin, the French company’s chief executive since 2013, does not think the time is right.

Similar stories had been doing the rounds in the spring, shortly before coronavirus paralysed global travel. But variations on the Accor-IHG rumour predate Marriott’s $13bn merger with Starwood in 2016 — a deal that triggered a wave of consolidation within the lodging industry. A year ago Accor was the rumoured target and IHG its pursuer. Accor was on a list of IHG merger candidates put forward in 2014 by activist investor Marcato Capital Management, when talk of US predators had created a sense of urgency to find a European champion. Yet the timing, it seems, has never been right.

Geographically, the idea makes sense. Nearly half of Accor’s rooms are in the Asia-Pacific region, meaning it would plug into an IHG portfolio with around 60 per cent of rooms in North America. The combined group would have 1.6m rooms — around 200,000 more than Marriott, split approximately equally between Europe, the Americas and Asia.

Strategically, too, a deal has its logic. Accor’s stable of brands — Sofitel, Mondrian, Ibis, Mama Shelter — has a balance of rich and edgy to fit almost any neighbourhood. The IHG approach is much narrower — Holiday Inn and Holiday Inn Express make up most of its estate — but it offers superior growth prospects thanks to its early-mover advantage in Greater China, which accounts for 15 per cent of rooms and 30 per cent of its pipeline.

Cost cutting is another justification. Jefferies analysts estimate expenses synergies of between €100m to €150m, equivalent to about 7 per cent of the enlarged group’s predicted operating earnings for 2022.

IHG also offers experience managing franchises and partnerships rather than owning the real estate, which matches Mr Bazin’s favoured model. Under his tenure Accor has sold and leased back nearly all of its property. IHG’s long embrace of the same asset-light model meant it could navigate the great financial crisis better than rivals while still throwing off cash from disposals, culminating in the 2015 sale of its flagship InterContinental Hong Kong.

So why is it never the right time? Well, it is complicated. Accor’s market capitalisation of €6.2bn is significantly less than IHG’s £7.3bn (€8bn) value, the latter having rallied more than 70 per cent from March lows while the former hardly budged. The French group would therefore need the backing of its main shareholders, China’s state-owned Jin Jiang International and the Qatar Investment Authority, to effectively underwrite the share issue needed to fund any bid. Support from a private equity fund, such as Mr Bazin’s former employer Colony Capital, might also be helpful.

The proposal would not be cheap, nor easy. Institutions that dominate IHG’s shareholder register would probably be expecting upwards of £50 a share as a starting point — a more than 20 per cent premium to its current price — as well as requiring the preservation of its FTSE listing.

A plausible scenario would involve Accor bidding using one-third cash and two-thirds new shares. Using Accor’s stock as a currency to buy more richly valued peer risks appealing more to investment bankers than to shareholders, however. And given the levels of financial engineering required, it is unfortunate, to say the least, that S&P Global downgraded Accor’s debt to junk status this week.

The bigger question: Post Covid-19, is Accor-IHG still the right deal to chase?

Hotel franchise owners pay management companies double-digit percentages of revenues in the belief that a well-known brand will drive higher room rates. Name recognition is most valuable for corporate travel, which accounts for an estimated 60 per cent of IHG’s demand: about two-thirds of its rooms are in the business-friendly midscale and upper-midscale niches. How quickly those rooms will refill after the pandemic is unknown.

For leisure travel, brand safety has appeal when on a budget but uniqueness counts for special occasions. IHG has no budget market exposure and InterContinental, its luxury chain, is by design a more homogeneous experience than Accor flagships such as Raffles in Singapore and The Savoy in London.

IHG is a structure built to withstand recessions, not pandemics. It is in the main revenue collection agency for around 3,000 small businesses, mostly US-based and often corporate-reliant, that are now fighting to survive. The historic reasons why an IHG-Accor merger made sense no longer look quite so compelling. A bid could still come, but the time might never be right.

Source: https://www.ft.com/content/0f2decbb-de27-4aa6-a4b2-54f2631771d1