research report on hotel industry

Intelligent Investment

2024 Global Hotels Outlook

Sector-specific tailwinds should offset broader economic challenges.

March 20, 2024 7 Minute Read

Executive Summary

After RevPAR rose to a record high in 2023, CBRE expects the U.S. to see another year of improvement in 2024. RevPAR growth is forecast to reach about 3% year-over-year, driven by the ongoing recovery in inbound international travel; strong performance in the meetings and group events segment; and continued demand from leisure travelers. Urban locations with leisure appeal and higher-priced hotels should outperform, but traditional hotel demand and pricing will likely be tempered by competition from alternative sources like cruise lines, short-term rentals, and glamping.

The Caribbean has made a remarkable recovery over the last 24-36 months and appears poised for continued growth, backed by a continued influx of tourists from the U.S. and limited new supply. While some risks remain, particularly the impact of climate change and hurricanes, the region’s resilience during the pandemic should provide a foundation for continued strong performance over the course of 2024 and beyond.

The Mexican Ministry of Tourism estimates that in 2024, international tourist arrivals to the country could increase by up to 5.4% and foreign expenditures by up to 0.3% compared to 2023. Beach resorts, such as the Riviera Maya, Los Cabos, and Cancun, can expect to see above-average hotel occupancy in 2024, supported by new developments and even with the completion of new hotel rooms this year.

Europe's hotel and tourism sector is poised to gain further momentum in 2024, with domestic and short-haul leisure travel remaining the primary drivers of hotel demand. Additional tailwinds will come from a rise in international long-haul leisure travel from Asia. However, following strong growth in RevPAR fueled by inflation and surging demand in 2023, momentum is likely to decelerate to a high single-digit rate, indicating a return to more normalized levels of demand growth.

Asia Pacific

Although airline capacity in Asia Pacific is yet to fully recover to pre-pandemic levels, CBRE forecasts that total international tourism arrivals should reach 2019 levels by the end of this year. While ADRs are expected to normalize in most markets, occupancy growth in well-managed assets should drive revenue growth. Operators that demonstrate flexibility and capitalize on the upswing in tourism will be the main beneficiaries, particularly those in North Asian markets, such as Japan and Korea.

2024 U.S. Outlook

RevPAR was up 3.2% year-over-year in 2023, boosted by a 2.7% year-over-year increase in ADR and a 0.5% year-over-year increase in occupancy. Most of the growth in RevPAR occurred in H1 2023. While early leaders coming out of the pandemic, such as economy and midscale hotels, reported slower growth, luxury hotels, which had been lagging, posted strong RevPAR growth of 4.6% year-over-year.

CBRE expects another year of improved performance in 2024. RevPAR growth is forecasted to reach about 3% year-over-year, driven by the ongoing recovery in inbound international travel; the strong performance in the meetings and group events segment; and continued demand from leisure travelers. However, growth may be tempered by rising demand for alternative lodging sources such as cruises and short-term rentals. The trend of higher-end hotel outperformance will continue in 2024, with luxury and upper-upscale RevPAR expected to increase by 3.8% year-over-year and 3.7% year-over-year, respectively.

Urban locations will show the strongest growth in RevPAR in 2024, fueled by the continued recovery of inbound international travel; sustained strength in the groups segment; and modest improvement in traditional corporate travel. The recovery in international visitors could also provide a meaningful boost, lifting occupancy by as much as 1.1 percentage points year-over-year, bringing levels within striking distance of all-time highs.

Gross operating profit (GOP) margins declined most of the year except for Q1 2023, which benefited from easy comparisons when the Omicron variant constrained demand. As of the end of December 2023, margins had declined by 125 basis points (bps) over the year, ending the period 256 bps below 2019 levels on an aggregate basis. CBRE expects margins to remain under pressure as cost increases will outpace RevPAR growth amid a renewed focus on brand standards; the tight labor market; and strong wage growth. Below the GOP line, higher insurance and property taxes will pose a greater burden on operational expenditure, while increasing construction costs will impact cash flows.

RevPAR for several U.S. hotel markets ended the year well above 2019’s levels. These included New York City, where the city’s strong leisure and global appeal along with Airbnb restrictions pushed up room rates to record highs; and San Diego, where a healthy mix of group business, leisure travel, and government demand continue to make the city a post-Covid top performer. Laggards include some markets in California, the Pacific Northwest or the Upper Midwest, where net migration outflows, rising crime and political issues have created tension, meaning it could take several more years for RevPAR to recover.

CBRE forecasts short-term interest rates to decline by 100 bps in 2024, which should support higher hotel investment volumes. Trophy assets and boutique hotels in supply-constrained differentiated locations will continue to offer attractive opportunities this year. Group hotels with leisure appeal and newly renovated premium select-service hotels associated with globally recognized brand families in strong demand markets will also be keenly sought after.

2024 Caribbean Outlook

Despite the devastating impact of COVID-19 on the Caribbean, which is heavily reliant on tourism, the region has made a remarkable recovery over the last 24-36 months and now appears to be on its best ever footing.

The rollout of COVID-19 vaccines and substantial government subsidies in the U.S., combined with a pent-up desire to travel, fueled an influx of tourists to the region in late 2021 and 2022. While some level of stabilization was expected in 2023, particularly with the resumption of cruises and the reopening of European tourism markets, the Caribbean managed to grow its share of overall travelers’ spending. CBRE’s analysis of a sample of the region’s largest markets shows all posted strong visitor arrival gains over the prior year, with a majority easily surpassing pre-COVID volumes.

Puerto Rico and Punta Cana, among the region's most active airports, posted visitor arrival increases of 18.3% year-over-year and 13.4% year-over-year in 2023, respectively, marking a significant improvement from 2019 levels. Aruba and Jamaica, two destinations in which U.S. tourists account for most arrivals, both posted increases of more than 10%, ending 2023 well ahead of pre-pandemic patterns.

Factors fueling growth in visitor arrivals include U.S. households’ changing lifestyles and priorities, which are pushing travel and experiences up their agenda. The pandemic showed many Americans how convenient the Caribbean is for a vacation from the U.S., while the adoption of flexible work-from-home policies translated into longer stays. Many tourists are also discovering the value of the All-Inclusive model compared to the typical European Plan which allows guests to enjoy their hotel stay without the unwanted surprise of additional charges upon checkout.

Limited new supply bodes well for the Caribbean hotel sector from an investment standpoint. Except for the Dominican Republic (Punta Cana), which saw the addition of just under 1,800 new rooms to inventory, representing about 2% of total supply, the completion of new hotels across the region was limited in 2023. While the pipeline of new developments and the pace of construction is solid, it continues to lag growth in visitors. In larger markets, local financing is becoming a credible alternative to borrowing in the U.S., thanks to major government incentive programs.

While some risks remain, particularly the impact of climate change and hurricanes, which have pushed up insurance rates, the region’s resilience during the COVID-19 pandemic should provide a foundation for continued strong performance over the course of 2024 and beyond.

Figure 1: Americas Hotel Performance and Key Macroeconomic Indicators as a % of 2019

2024 mexican outlook.

The hotel segment in Mexico continued to recover during 2023. From January to November, slightly over 37.5 million international tourist arrivals were recorded to the country, representing a 10.3% increase above the same period of 2022 and just 6.8% below pre-pandemic levels.

Improvements to aviation infrastructure and the addition of more flights boosted international tourist arrivals through this channel to just over 20.3 million as of November 2023, 15.6% higher than the same period of 2019. In terms of tourism revenue, US$27.4 billion was generated in the year to November 2023, a figure 24% higher than the same period in 2019. The Mexico Ministry of Tourism estimates that by 2024, international tourist arrivals to the country could increase by up to 5.4% year-over-year, while revenue could rise by up to 0.3% compared to 2023.

Hotel occupancy in the 70 tourist destinations covered by DataTur reached 59.6% as of November 2023, a figure 80 bps below the same period of 2019. The Ministry of Tourism expects occupancy to stay at roughly the same level in 2024. Beach resorts such as the Riviera Maya, Los Cabos, and Cancun are expected to see continued hotel occupancy at above-average rates, driven by the development of new hotel projects and the completion of new hotel rooms scheduled for 2024.

Figure 2: Mexican Hotel Performance and Key Macroeconomic Indicators as a % of 2019

2024 european outlook.

Europe's hotel and tourism sector is poised to gain further momentum in 2024, with domestic and short-haul leisure travel remaining as the primary drivers of hotel demand. Additional tailwinds will be provided by a rise in international long-haul leisure travel from Asia, supported by the addition of more long-haul flights, which should support solid growth in the volume of long-haul inbound travelers.

Business travel, particularly the international long-haul segment, is expected to show meaningful year-over-year improvement. However, this category will lag the leisure segment due to the slow return to the office in some markets and the growing prevalence of virtual meetings.

Several major upcoming sporting and entertainment events should help certain hotel operators increase room rates and raise occupancy. These include the 2024 Summer Olympics in Paris and the 2024 UEFA European Football Championship in Germany, as well as major concert tours by Coldplay and Taylor Swift.

The conflicts in Ukraine and the Middle East may cause some travelers to shift their travel plans to northern and western Europe, as was seen during prior periods of conflict. As these are generally higher ADR markets, this shift could be another catalyst for occupancy growth and rate compression during peak periods.

After strong growth in RevPAR fueled by inflation and surging demand in 2023, momentum is likely to moderate. CBRE expects RevPAR growth in 2024 to decelerate to a high single-digit rate, indicating a return to more normalized levels of demand growth.

Hotel operators’ ability to adapt quickly to changing market conditions during the pandemic has led to improved operational efficiency, ensuring they are well positioned to maintain profitability in the face of potentially challenging economic conditions. However, simultaneous increases in utility costs and ongoing wage growth require operators to adopt a proactive approach to revenue management and implement rigorous cost-control measures.

The luxury and resort segments are expected to outperform other categories in 2024 due to strong wealth creation and high-income groups’ growing preference for personalized experiences. These drivers are less vulnerable to macroeconomic headwinds, further solidifying the positive outlook for these segments.

From 2009 to 2023, overall European hotel supply grew at a compound annual growth rate (CAGR) of 1.4%. Starting this year, supply growth is expected to moderate to a CAGR of just 1%, well below the estimated 3% year-over-year rise in visitor arrivals. This will provide a solid foundation for future RevPAR gains.

The UK and Germany are at the forefront of European hotel developments, collectively accounting for over a third of the total hotel pipeline from 2024 to 2028. These markets will therefore experience relatively higher growth in the number of hotel rooms.

France, Spain and Italy will see a more favorable supply and demand balance, with relatively limited new hotel development and increased international inbound visitors in 2024 and beyond. These trends underscore the potential for further gains in RevPAR and operating income in these markets and reaffirms their status as attractive investment targets.

Average hotel occupancy in Europe rose to 69% as of end-December 2023, signaling a general recovery in occupancy across key markets. Nevertheless, this figure remains about 500 bps below 2019 levels. While the uptick in occupancy has been noteworthy, it will have only a moderate impact on hotel revenue growth in 2024.

After significant interest rate increases negatively impacted hotel investment volume across most European markets in 2023, hotel transactions are expected to gradually pick up in 2024. Investment activity is likely to be backloaded in the second half of the year after investors obtain clearer insight into interest rate movements.

Improving operating fundamentals will boost confidence among some hotel owners, making them reluctant to lower asking prices. This will set hotels apart from other commercial real estate sectors that have undergone substantial repricing. At the same time, investors are expected to maintain a more patient yet active stance, guided by the expectation that easing inflation will eventually lead to lower financing costs.

The enduring strength in leisure demand and increased preference for personalized experiences will continue to direct buyers to hotels in popular tourism and resort destinations. We expect institutional funds and private investors to strategically allocate capital towards premium hotels in key leisure and tourism locations across Spain, Portugal, and Italy over the course of 2024.

We also expect opportunistic investors to eye European hotel properties that have the potential for operational improvements. The introduction of stricter ESG policies and regulations for hotels will also prompt more retrofitting to ensure properties meet higher sustainability standards.

Figure 3: European Hotel Performance and Key Macroeconomic Indicators as a % of 2019

2024 asia pacific outlook.

According to the Official Airline Guide (OAG), total available aircraft seats in Asia Pacific in 2023 remained below 2019 levels due to airlines’ inability to bring back staff and a shortage of aircraft for domestic and international flights. As of December 2023, most major markets, except for mainland China, were operating at a 10-15% deficit in available international aircraft seats.

Despite this, according to International Air Transport Association (IATA), Asia Pacific airlines posted a 126.1% rise in full-year international 2023 traffic compared to 2022, maintaining the strongest year-over-year rate among the regions. Capacity rose 101.8%, and the load factor climbed 9.0 percentage points to 83.1%. December 2023 traffic rose 56.9% compared to December 2022.

Although further growth in international travel is expected in 2024, the challenging global economic environment could impede the recovery. Concerns include persistently high inflation, which is raising transport and accommodation costs for tourists, and slower economic growth, which typically correlates with fewer international departures. This means that markets that are dependent on international departures will likely lose momentum over the next six months.

Air passenger forecasts in the region nevertheless remain positive. According to the IATA's December 2023 forecast, passenger throughflow for airports in Asia Pacific is set to surpass 2019 levels during 2024. Growth in air passengers in Asia Pacific is expected to eclipse that in Europe and North America.

A rise in international arrivals from key markets, particularly Japan and mainland China, pushed up Asia Pacific hotel room rates in 2023.

After experiencing demand-driven growth in 2022 as borders re-opened, ADR growth in 2023 was driven by hotel owners’ need to offset rising operational costs alongside operators’ preference to drive ADR to mitigate inflation.

Demand-based pricing has allowed operators to use ADR to offset rising inflation across the region.

This flexibility in ADR change can also be attributed to the increased market share of individual business and leisure or transient travelers which are more subject to changes in the daily rate than corporate group stays.

While ADR is expected to normalize in most markets, occupancy growth in well-managed assets should drive revenue growth in 2024. Hotel operators in North Asia markets, such as Japan and Korea, are particularly well positioned to benefit. While ADRs in Hong Kong SAR have recovered to pre-pandemic levels, occupancy continues to lag as non-mainland Chinese visitors have yet to return to the city in significant numbers.

Figure 4: Asia Pacific Hotel Performance and Key Macroeconomic Indicators as a % of 2019

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US Hospitality Directions: November 2023

Economic headwinds and geopolitical tensions will likely impact hotel performance through 2024.

Leisure demand, while still strong, began to soften in the back half of this year for US hotels, as other parts of the world continued to reopen their vacation destinations and leisure travelers began to once again feel safe traveling abroad. Increases in individual business travel and group business have not yet been able to fully offset this softening. As a result, occupancy levels have declined in each of the past seven months, relative to comparable 2022 levels, and are expected to continue to be down during the remainder of this year and through at least the first quarter of 2024. Room rate growth had played a significant role in the initial recovery for US hotels but softened significantly in Q2 before falling to below inflationary growth levels in Q3. That said, ADR growth is expected to begin to increase and slightly exceed a declining inflation level beginning in Q4 and into next year.

The Fed’s continued increases in its policy rate, continued declines in the public markets since early August, and more recently, the war in Israel have begun to have a downstream impact on hotel demand. Nonetheless, we expect annual occupancy for US hotels this year to increase to 63.0 percent. With declines in occupancies for the balance of this year, we expect average daily room rates to increase 4.5 percent for the year, with resultant RevPAR up 5.2 percent - - approximately 114 percent of pre-pandemic levels, on a nominal dollar basis.

“A continued tightening of financial conditions has begun to have an impact on the overall economy. Since our last issue of Hospitality Directions US in May, we've seen two consecutive quarters of decline in hotel occupancies and expect to see two more in Q4 this year and Q1 2024 before a gradual rebound. We expect to see RevPAR growth to once again exceed PCE inflation beginning in Q2 next year.” Warren Marr, US Hospitality & Leisure Managing Director

Trends and highlights

• Since our May 2023 outlook, the Fed’s monetary policy has remained a major concern, with no material improvement expected until sometime next year, keeping the availability of debt – that is priced in sync with asking prices for hotel assets – largely unavailable. As a result, transaction activity has been and is expected to remain muted until the Fed adjusts monetary policy in a meaningful way, or the bid-ask spread on hotel assets narrows.
• As we enter 2024, the outlook for midweek travel remains unclear with some companies indicating changes to their business travel policies in efforts to tighten corporate budgets, as well as achieve sustainability goals. Outbound international leisure travel continues to outpace inbound, given the relative strength of the dollar and pent-up demand for international travel following the pandemic. With occupancy levels expected to be relatively flat in 2024, performance gains are once again expected to come almost entirely from ADR, with an expected year-over-year increase in RevPAR of 2.7 percent – approximately 117 percent of pre-pandemic level.
• Significant risks to this outlook include the pace and magnitude of changes in the macroeconomic environment, as well as increasing geopolitical tensions.

RevPAR percent change, US and chain scales

Source: PwC, based on data from STR

About Hospitality Directions

PwC Hospitality Directions US is a near-term outlook for the US lodging sector, commonly used by industry decision-makers and stakeholders to better understand the impact of policy and other macro-environmental factors on the sector’s operating performance. Our outlook includes metrics for the overall sector as well as for the chain scales, and is used by our clients for

• strategic planning and capital allocation purposes
• demand and supply
• average daily rate
• revenue per available room

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STATE OF THE HOTEL INDUSTRY 2021

AHLA's State of the Industry Report outlines the forecasted state of the hotel industry in 2021 and into the immediate future. The report examines the high-level economics of the hotel industry’s recovery, the specific impact on and eventual return of business travel, and consumer travel sentiments.

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• New AHLA report examines the hotel industry’s recovery, the specific impact on and eventual return of business travel, and consumer travel sentiments. 
• The impact of COVID-19 on the travel industry so far has been nine times that of 9/11. Hotels were one of the first industries affected by the pandemic and it will be one of the last to recover. 
• View the report. In 2021, many challenges remain for hotels. Despite obstacles, hotels across the country are resilient and focused on creating an environment ready for guests when travel begins to return in 2021. 
• Hotels support one in 25 American jobs before COVID. While the industry expects to gain jobs this year, we won’t reach pre-pandemic levels until 2023: 
• New AHLA industry report expects business travel to lag at least 85% through April
• #FACT: More than 56% of Americans see vaccine as a key to travel, and over one-third feel comfortable staying in hotel.

REPORT KEY FINDINGS

• Half of U.S. hotel rooms projected to remain empty
• Leisure and hospitality sector ended 2019 down 4 million jobs
• Hotels to add 200,000 direct jobs, but remain 500,000 below 2019 levels
• Business travel expected down 85% through April
• 56% of consumers expect to travel for leisure
• Nearly half of consumers see vaccine distribution as key to travel

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Trends ® in the Hotel Industry  is an annual compilation of unit-level hotel financial statements. Since 1936, CBRE Hotels Research has collected year-end operating statements from thousands of hotels across the nation. From these statements, our Firm extracts 200 specific revenue and expense items and then puts the data into a uniform format to ensure equitable benchmarking. The results of the survey are presented in our annual Trends ® in the Hotel Industry report. The Trends ® report provides an analysis of hotel revenues, expenses, and profits. The data is arrayed in a variety of property type, geographic location, rate, and size categories, thus allowing hotel owners and operators to benchmark the performance of their properties to industry-wide averages of a similar profile.

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The 2023 Edition of Trends ® contains 2022 data for the U.S. lodging industry. The PDF report i ncludes access to an interactive online tool and excel workbook containing all the data tables.   

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Hotel  industry worldwide - statistics &  facts

What are the biggest hotel companies in the world, markets with the most hotel projects in the pipeline worldwide, key insights.

Detailed statistics

Global hotel and resort industry market size worldwide 2013-2023

Hotel openings worldwide 2021-2024

Market value of biggest global hotel and resort companies 2023

Editor’s Picks Current statistics on this topic

Current statistics on this topic.

Leading hotel companies worldwide 2023, by number of properties

Most valuable hotel brands worldwide 2023, by brand value

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Recommended.

• Tourism worldwide
• Cruise industry worldwide
• Hospitality industry in Canada

Recommended statistics

Industry overview.

• Premium Statistic Global hotel and resort industry market size worldwide 2013-2023
• Premium Statistic Hotel openings worldwide 2021-2024
• Premium Statistic Hotel room openings worldwide 2021-2024
• Premium Statistic Monthly occupancy rate of hotels worldwide 2020-2023
• Premium Statistic Monthly hotel occupancy rates worldwide 2020-2023, by region
• Premium Statistic Change in monthly number of hotel bookings worldwide 2020-2023
• Premium Statistic Change in monthly number of hotel bookings worldwide 2020-2023, by region

Market size of the hotel and resort industry worldwide from 2013 to 2022, with a forecast for 2023 (in trillion U.S. dollars)

Number of hotels opened worldwide from 2021 to 2022, with a forecast for 2023 and 2024

Hotel room openings worldwide 2021-2024

Number of hotel rooms opened worldwide from 2021 to 2022, with a forecast for 2023 and 2024

Monthly occupancy rate of hotels worldwide 2020-2023

Monthly occupancy rate of hotels worldwide from 2020 to 2023

Monthly hotel occupancy rates worldwide 2020-2023, by region

Monthly hotel occupancy rates worldwide from 2020 to 2023, by region

Change in monthly number of hotel bookings worldwide 2020-2023

Year-over-year monthly change in number of hotel bookings worldwide from 2020 to 2023

Change in monthly number of hotel bookings worldwide 2020-2023, by region

Year-over-year monthly change in number of hotel bookings worldwide from 2020 to 2023, by region

Key players

• Premium Statistic Market value of biggest global hotel and resort companies 2023
• Premium Statistic Sales of biggest global hotel and resort companies 2023
• Premium Statistic Most valuable hotel brands worldwide 2023, by brand value
• Basic Statistic Leading hotel brands in the world 2022, by traveler ratings

Leading hotel and resort companies worldwide in 2023, by market value (in billion U.S. dollars)

Sales of biggest global hotel and resort companies 2023

Leading hotel and resort companies worldwide in 2023, by sales (in billion U.S. dollars)

Leading hotel brands based on brand value worldwide in 2023 (in billion U.S. dollars)

Leading hotel brands in the world 2022, by traveler ratings

Best-rated hotel brands worldwide in 2022, based on traveler scores

Digitalization

• Premium Statistic Global market size of the smart hospitality sector 2021-2031
• Premium Statistic Change in monthly number of online hotel searches worldwide 2020-2023, by region
• Premium Statistic Technologies global hotels plan to implement in the next three years 2022
• Premium Statistic COVID-19 hotel technologies or services that global consumers want long-term 2022
• Premium Statistic Hotel technologies global consumers think would improve their future stay 2022
• Premium Statistic Guests interested in touring hotels using VR/metaverse technology worldwide 2022
• Premium Statistic Guests interested to stay at hotels with automated messaging/chatbots worldwide 2022
• Premium Statistic Guests more likely to stay at hotels with self-service technology worldwide 2022

Global market size of the smart hospitality sector 2021-2031

Market size of the smart hospitality sector worldwide in 2021, with a forecast for 2031 (in billion U.S. dollars)

Change in monthly number of online hotel searches worldwide 2020-2023, by region

Year-over-year monthly change in number of online hotel searches worldwide from 2020 to 2023, by region

Technologies global hotels plan to implement in the next three years 2022

Technologies hotels are most likely to implement in the next three years worldwide as of 2022

COVID-19 hotel technologies or services that global consumers want long-term 2022

Hotel technologies or services popularized during the pandemic that travelers would like to see permanently adopted worldwide as of 2022

Hotel technologies global consumers think would improve their future stay 2022

Must-have hotel technologies to create a more amazing stay in the future among travelers worldwide as of 2022

Guests interested in touring hotels using VR/metaverse technology worldwide 2022

Share of travelers that are interested in using a virtual reality/metaverse experience to tour a hotel before booking worldwide as of 2022

Guests interested to stay at hotels with automated messaging/chatbots worldwide 2022

Share of travelers that are interested in staying at a hotel offering automated messaging or a chatbot to provide support for most customer service requests worldwide as of 2022

Guests more likely to stay at hotels with self-service technology worldwide 2022

Share of travelers that would be more likely to stay at a hotel offering self-service technology that minimizes contact with staff worldwide as of 2022

Construction outlook

• Premium Statistic Countries with the most hotel construction projects in the pipeline worldwide 2022
• Premium Statistic Countries with the largest amount of hotel rooms in the construction pipeline 2022
• Premium Statistic Cities with the most lodging projects in the pipeline worldwide 2022
• Premium Statistic Cities with the largest amount of lodging rooms in the pipeline worldwide 2022
• Premium Statistic Number of rooms in the pipeline worldwide 2022, by company

Countries with the most hotel construction projects in the pipeline worldwide 2022

Countries with the highest number of hotel construction projects in the pipeline worldwide as of Q4 2022

Countries with the largest amount of hotel rooms in the construction pipeline 2022

Countries with the highest number of hotel rooms in the construction pipeline worldwide as of Q4 2022

Cities with the most lodging projects in the pipeline worldwide 2022

Cities with the highest number of lodging projects in the construction pipeline worldwide as of Q4 2022

Cities with the largest amount of lodging rooms in the pipeline worldwide 2022

Cities with the highest number of lodging rooms in the construction pipeline worldwide as of Q4 2022

Number of rooms in the pipeline worldwide 2022, by company

Number of hotel rooms in the construction pipeline worldwide as of Q4 2022, by company

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57 Hospitality Reports

Study Period: 2019 - 2029

Regions Covered: North America, Europe, Asia-Pacific, Latin America, Middle East and Africa

Major Players: Hot Springs Resort & Spa, Four Seasons Hotel Limited, Emirates Palace Spa, Lanserhof, Massage Envy

Study Period: 2020 - 2029

Regions Covered: North America, Europe, Asia Pacific, South America

Major Players: ITC HOTELS, Marriott International Inc, Accor S.A., Belmond Ltd., Hyatt Corporation

Regions Covered: North America, Asia Pacific, Europe, Latin America, Middle East and Africa

Major Players: Expedia Group Inc., Booking Holdings Inc., Airbnb Inc., Tripadvisor Inc., Traveloka Indonesia PT

Country Covered: India

Major Players: Oberoi Hotels & Resorts, The Park Hotel, ITC Hotels, Lemon Tree Hotels, Taj Hotels

Country Covered: Vietnam

Major Players: Vinpearl, Muong Thanh Hospitality, Accor Hotels, InterContinental Hotels Group, Marriott International

Country Covered: Spain

Major Players: Meliá Hotels International, Barceló Hotel Group, Eurostars Hotel Company, Marriott International, NH Hotel Group

Country Covered: Austria

Major Players: AccorHotels, Hilton Hotels & Resorts, Motel One, Private City Hotels, Arcotel Hotels & Resorts

Country Covered: France

Major Players: AccorHotels, Louvre Hotels Group, B&B Hotels, Brit Hotels , Best Western Hotels & Resorts

Country Covered: Sweden

Major Players: Elite Hotels, First Hotels, Nordic Choice Hotels, Scandic Hotels, Best Western Hotels & Resorts

Country Covered: Croatia

Major Players: Amadria Park, Bluesun H&R, Liburnia Riviera Hoteli, Plava Laguna, Valamar Riviera

Study Period: 2020-2029

Country Covered: Turkey

Major Players: Accor SA, InterContinental Hotels Group, Marriott International, Inc, Wyndham Hotels & Resorts Inc, Rixos Hotels

Country Covered: United Kingdom

Major Players: Whitbread Group , InterContinental Hotels Group , Travelodge, Accor SA, Marriott International, Inc 

Country Covered: Maldives

Major Players: Marriott International, Hilton Worldwide, InterContinental Hotels Group, AccorHotels, Hyatt Hotels Corporation

Country Covered: Thailand

Major Players: Centara Hotels, Accor SA , InterContinental Hotels Group, Onyx Hospitality Group , Marriott International, Inc 

Country Covered: China

Major Players: Beijing Zhiyuan International Travel Agency Co. Ltd., Emei Shan Tourism Co. Ltd., Expedia Group Inc., Guangdong International Hotel Management Holdings Ltd., Huangshan Tourism Development Co. Ltd., Huazhu Group Ltd.

Country Covered: Italy

Major Players: Accor SA , InterContinental Hotels Group, Marriott International, Inc, Hilton Hotels and Resorts, Gruppo UNA SpA

Country Covered: Germany

Major Players: Accor SA, InterContinental Hotels Group, Marriott International, Inc, Deutsche Hospitality, Maritim Hotelgesellschaft  mbH 

Country Covered: Netherlands

Major Players: Van der Valk  , Accor SA, NH Hotels , InterContinental Hotel Group, Fletcher Hotel 

Country Covered: Singapore

Major Players: Marriott international, Far East Hospitality , InterContinental Hotels Group Plc, Pan Pacific Hotels Group, Accor SA

Country Covered: Switzerland

Major Players: Accor SA, InterContinental Hotels Group, Marriott International, Inc, Sorell Hotels, Radisson Hotel Group

Country Covered: Mexico

Major Players: Grupo Posadas, InterContinental Hotels Group, Marriott International, Cityexpress Hoteles, Grupo Real Turismo

Country Covered: Sri Lanka

Major Players: Shangri-La Hotels and Resorts, Mariott International, Inc, Amaya Resorts & Spa , Cinnamon Hotels & Resorts , InterContinental Hotels & Resorts

Country Covered: United States

Major Players: Marriott International, Hilton Worldwide, Wyndham Hotels & Resorts, InterContinental Hotels Group (IHG), Choice Hotels International

Country Covered: Canada

Major Players: Wyndham Hotel Group LLC , Choice Hotels International Inc, Best Western International Inc, Coast Hotels Limited , Marriott International Inc

Country Covered: Argentina

Major Players: Wyndham Hotel Group LLC , Marriott International, Inc , NH Hotels Group SA , Four Seasons Hotels, Accor SA

Country Covered: Japan

Major Players: Toyoko Inn Co Ltd , Route-Inn Hotels , APA Hotels & Resorts , Prince Hotels & Resorts , Super Hotel Co Ltd

Country Covered: Morocco

Major Players: Accor SA, Louvre Hotels Group , Wyndham Hotels and Resorts , Kenzi Hotel Group , Marriott International, Inc.

Country Covered: Brazil

Major Players: Accor SA, Choice Hotels International, Louvre Hotels , Nacional Inn Hoteis e Centros de Convencoes , Wyndham Hotel Group

Country Covered: Hong Kong

Major Players: Harbour Plaza Hotel Management Limited, Regal Hotels International, Marriott International Inc, InterContental Hotel Group, Dorsett Hospitality International

Country Covered: Saudi Arabia

Major Players: Al Hokair Group, Dur Hospitality Company, Al Tayer Group, InterContinental Hotels Group , Marriott International Inc

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COVID-19 impact on the hospitality industry: Exploratory study of financial-slack-driven risk preparedness

The hospitality industry is regarded as one of the most affected by the consequences of COVID-19 pandemic, and the undefined persistence of the pandemic duration raises anxiety about the ability to recover from this dramatic situation. In this regard, the purpose of this exploratory study is to shed light on the COVID-19 risk preparedness of hospitality businesses, as driven by the financial slack holdings and persistence. The empirical findings confirm that their financial-slack-driven risk preparedness should be judged as relatively low. A majority of the examined hospitality businesses demonstrated low or insufficient financial slack holdings and recently have consumed their financial slack resources. Thus, the abilities of hospitality businesses to sustain the liquidity tensions that emerged after the COVID-19 outbreak are questionable. Facing this evidence, we draw conclusions about the necessary design of system interventions that could prevent bankruptcy in the hospitality industry.

1. Introduction

In the 21 st century, the world has been threatened by the risk of pandemic several times. Previous incidents, including outbreaks of the SARS and MERS coronaviruses, the avian and swine flues and very recently the Zika virus, have been perceived as severe threats to the continuity of numerous businesses, including those operating in the hospitality industry (and the whole travel and leisure-related sector). However, the current COVID-19 pandemic is unprecedented in the scale of its global impact and ‘ is affecting the DNA of hospitality at its core ’ ( Rivera, 2020 ).

At governmental levels, the COVID-19 pandemic has created an urgent need to ensure the sufficiency of healthcare systems and has led to the implementation of various intervention mechanisms directed at slowing the spread of the virus. These mechanisms imposed social distancing, bans on mass events, and numerous travel restrictions, for example, border closures. Thus, it is not surprising that travel and leisure-related industries, especially the hospitality industry, are at the top of the list of most affected branches of economies. However, slowing the virus spread prolongs the period of businesses discontinuities. In fact, it is difficult to predict the duration of the pandemic, which shifts this risk to undefined persistence and increases businesses’ anxiety.

The situation raises an important question on whether the hospitality businesses are prepared to sustain and successfully recover from the period of operating discontinuity caused by the waves of pandemic outbreak. The problem is obviously a relevant industry priority and is addressed in this study by exploring the extent of hospitality businesses’ risk preparedness from financial perspective. Facing the sudden outflow of customers and inability to generate cash inflows from sales, the hospitality businesses are exposed to high liquidity tensions, which imposes greater risk for their successful recovery. However, liquidity tensions are less problematic for firms that hold a buffer of available funds. Thus, the empirical investigation of risk preparedness performed in this study utilizes the concept of financial slack as a resource. In general, financial slack refers to uncommitted and high-discretionary liquid assets held by the company, in particular, the holdings of cash and marketable securities ( Daniel et al., 2004 ; Mishina et al., 2004 ; Bourgeois, 1981 ). In the context of risk preparedness, the buffering function of financial slack is critical; financial slack resources provide a cushion against the liquidity tensions caused by the disruptions of operating performance. In other words, the businesses distinguished by higher levels of financial slack holdings are regarded as those with better risk preparedness.

This study contributes to the existing literature on available slack holdings by exploring solely the situation of hospitality businesses. This is relevant, as prior works have confirmed financial slack holdings being related to firm and industry-specific characteristics (for an overview, see, e.g., Daniel et al. (2004) and McMahon (2006)) . Moreover, this study goes beyond the common methodical approaches that employ regression to find the determinants of liquid assets holdings. For hospitality industry such approach was adopted by Kim et al. (2011) on a sample of US restaurants or recently by Demir et al. (2019) on hospitality industries located in emerging countries. To better address the risk-preparedness context, this study expands the existing approaches, by developing a model to evaluate financial-slack-driven risk preparedness, which offers another relevant contribution. The model clusters the companies with regard to both the size of their financial slack holdings (sufficient or insufficient) and their slack behavior over time (slack consumption or slack accumulation). In this respect, this study supplements the identification of the determinants of liquid assets holdings.

This exploratory work contributes also to the existing body of literature on risk and crisis management in the hospitality industry. As pointed out by Paraskevas and Quek (2019) , the literature on risk and crisis management in travel and leisure-related industries (including the hospitality industry) has remained focused on understanding the crisis situations and on analyzing the recovery paths, often following a ‘crisis-by-case’ approach. Works that revise the recent epidemics (SARS or avian and bird flues) from the perspective of the hospitality industry confirm this statement (for instance, Chen et al. (2007) ; Chien and Law (2003) ; Wu et al. (2010) ; Chuo (2014) , and Tse et al. (2006) ). In this respect, a relevant contribution of this work is the emphasis on the relevance of liquid assets holdings in the effective recovery from disruptions, followed by the exploration of the factual recovery starting point from an industry oriented perspective. In this aspect, this paper also responds to the call for studies that help to better understand the resilience capabilities of businesses related to the travel and leisure sector and the factors that drive these capabilities. The call for this kind of research was addressed by Ritchie and Jiang (2019) and Mansfeld and Pizam (2006) , grounded in a summary of prior studies related to risk management in the travel and leisure-related industries.

In the empirical layer, the paper explores the situation of hospitality businesses that operate in four central European countries: the Czech Republic, Hungary, Poland and Slovakia. These countries are regarded as comparable on numerous dimensions of their economic performance, driven by the similar routes of the process of transformation from a command to market economy and European Union accession. These countries are also regarded as comparable in terms of the contribution of the travel and leisure sector to their GDPs and are judged as equally popular tourist destinations ( Krzesiwo et al., 2018 ). Moreover, facing the threat of the COVID-19 pandemic, the Czech Republic, Hungary, Poland and Slovakia implemented similar interventions, almost perfectly coordinated in time. Thus, the impact of the pandemic risk hit the hospitality businesses operating in these countries on a relatively comparable scale.

The remainder of this paper is structured as follows. Section 2 explains the conceptual framework of the study. In particular, it explains the assumptions of the proposed model of the analysis of financial risk preparedness, as driven by financial slack holdings and persistence. Section 3 develops research questions, whereas section 4 explains the research design and method. Section 5 presents the results and discussion. Section 6 concludes the study.

2. Conceptual framework

2.1. financial consequences of covid-19 disruptions from a hospitality business perspective.

In the 21 st century the world has been threatened several times by the risk of a global spread of an infectious disease. In 2009, the ‘swine flu’ (H1N1 virus) outbreak was first officially announced to be a pandemic by the WHO ( WHO, 2009 ). However, the hospitality industry was notably affected by the consequences of the epidemics of SARS (2002–2003), MERS (2012) in Asia, Ebola in 2013–2014 in West Africa and Zika in 2015 in Brazil and the Caribbean region ( MARSH, 2020 ). The literature related to risk management in the tourism and leisure sector has reviewed the consequences of a pandemic risk from a variety of perspectives (see, e.g., Yang et al. (2017) ; Ritchie and Jiang (2019) or Rosselló et al. (2020) for an overview). For instance, the impact of prior epidemics (SARS in particular) on travelers’ behavior and the related decline of demand in the travel and leisure sector was addressed by Kuo et al. (2008) ; Mao et al. (2010) ; McAleer et al. (2010) ; Rosselló et al. (2017) and Yang et al. (2017) . Chen et al. (2007) studied the impact of SARS on Taiwanese hotels’ stock performance, while Chien and Law (2003) examined hotel performance in Hong Kong. The problem of the impact of infectious disease spread on hotel occupancy rates was also studied by Wu et al. (2010) , following the spread of ‘swine flu’ (H1N1 virus). The impact of epidemics on various aspects of restaurant performance was addressed, for instance, by Chuo (2014) (self-protective behavior) and by Tse et al. (2006) (risk response to SARS).

The current COVID-19 outbreak, however, hit the global community on an unprecedented scale. On 31 December 2019, the first cases of the novel coronavirus disease were reported in Wuhan (China). Only two weeks later (13 January 2020), the first cases were reported outside China (in Thailand). To prevent the global spread of the virus, the Wuhan lockdown was announced 10 days later (23 January 2020), which was accompanied by travel restrictions to and from China imposed by numerous countries worldwide. However, these measures proved ineffective, and by the end of February 2020, COVID-19 has quickly spread in north Italy. Consequently, on 12 March 2020, the WHO announced the COVID-19 pandemic ( WHO, 2020 ). To limit the speed of the virus spread, numerous countries have implemented very severe measures, such as border closures and social distancing, which have in turn severely affected the whole travel and leisure industry. As of 20 April 2020, travel restrictions were introduced in 100% of worldwide destinations ( UNWTO, 2020 ).

The global lockdown and related travel restrictions have resulted in the discontinuity of operating activity of travel and leisure-related businesses worldwide. Following the recently published United Nations World Tourism Organization (UNWTO) scenarios, depending on the gradual opening of borders and limiting of travel restrictions, it is expected that in 2020, we will face a drop of 58–78% in international tourist arrivals, while international tourism receipts could plunge by 1 trillion US dollars. In the economic dimension, the overall impact in 2020 is expected to bring tremendous loss in export revenues from tourism and to place 100–120 million direct tourism jobs at risk ( UNWTO, 2020 ). These figures refer to the tourism and travel sector in general. However, as a majority of hospitality industries are tightly related to tourism arrivals, these figures also provide insight into the potential scale of the COVID-19 outbreak consequences in businesses operating in the hospitality industry. Moreover, these consequences are amplified by the social distancing measures implemented internally by the particular countries.

If we consider the impact of the COVID-19 outbreak from a risk management point of view, unique features of the pandemic risk need to be addressed. In the process of risk analysis, a common approach is to evaluate the impact of risk with reference to its probability (chance) and severity (outcomes) ( Aven, 2016 ; Oroian and Gheres, 2012 ). In the case of pandemic risk, we are able to model the severity of risk outcomes by addressing the consequences of the pandemic in terms of, e.g., number of fatalities. However, pandemic risk distinguishes with indecisive probability. Following the concept of Renn (2008) , the COVID-19 pandemic has also shown the relevance of other, less common features of risk, such as ubiquity (geographic dispersion), persistence (temporal extension of consequences), and reversibility (ability to recover after the damage). COVID-19 has spread relatively quickly around the whole globe, and it is currently impossible to reliably define its persistence. In fact, intervention strategies implemented by countries worldwide are directed at slowing the virus spread (which is relevant to the healthcare system sufficiency) and restricting human mobility, which is particularly harmful for the travel and leisure-related industries ( Linkov and Trump 2019 ). These intervention strategies, however, expand the duration of the pandemic to an undefined time interval. Finally, the COVID-19 pandemic distinguishes with questionable reversibility. The economic consequences of the virus spread and the related interventions have an impact on numerous dimensions of human activity, in particular the severe disruptions of the performance of numerous businesses, inevitably followed by bankruptcy waves, increased unemployment, and ultimately growing social concerns and anxiety. Not surprisingly, the strongest economies worldwide expect a deep economic crisis in the aftermath of the coronavirus pandemic.

Driven by the consequences of COVID-19 from a risk management perspective, in Fig. 1 , we present an illustration of the main directions of the COVID-19 outbreak impact on the performance of hospitality businesses. The presented model is framed within a breakeven-point analysis, which is essential for evaluating the rationale behind the operating activity of any business ( Brigham and Ehrhardt, 2011 ). The breakeven-point analysis remains focused on the relationship between sales revenues and total operating costs to clarify whether the business is able to produce a satisfactory operating profit margin. In this respect, the impact of COVID-19 on hospitality businesses is twofold. First, it significantly reduced the level of sales revenues due to the sudden decrease of demand and sales since the moment of businesses’ lockdown. If the businesses are allowed to return to operating activity during the pandemic, the expected sales revenues will be lower than previously expected, due to both the lower demand for hospitality services and the typically imposed restrictions that are related to the reduced number of customers. Second, during the period of discontinuity of operating activity (between the moment of lockdown until the moment of the return to operating activity), businesses need to cover their fixed costs. In the hospitality industry, these costs could be relatively high because they are related to the maintenance of the property or workforce. If the return to operating activity is possible under further restrictions, the operating costs could be even higher than previously expected and planned. In particular, new sources of costs could emerge related to the implementation of the necessary safety measures (e.g., disinfection or protection of employees). The ultimate outcome is a significant decrease in operating profit, which in turn negatively influences the profitability of the business. The discrepancy between the expected and real operating profit refers to the scale of its reduction. However, in real-life situations, these discrepancies could be far more severe, leading to operating losses.

The illustration of the main directions of the COVID-19 outbreak impact on the performance of hospitality businesses.

The period of discontinuity of operating activity is very severe because, due to reduced sales, there are no cash inflows, and at the same time, there is a necessity to pay the business’s obligations timely. This period is critical and could lead to severe liquidity tensions and bankruptcy threats. Thus, in Fig. 1 , we highlight that the period of operating discontinuity leads to the consumption of financial slack resources, if held. To better address this issue, however, we first need to explain the concept of financial slack and the interplay between financial slack holdings and risk preparedness.

2.2. Financial slack holdings and risk preparedness

Effective risk management should result in better risk preparedness by both the implementation of physical risk control measures and the preparedness of adequate financial recovery plans. The COVID-19 pandemic has shown the relevance of being financially prepared for operating activity disruptions. To a great extent, the ability to sustain and recover from the operating discontinuity is determined by the business’ ability to control the related financial consequences. In this respect, the prime source of internal aid is the holdings of financial slack resources.

In general, slack is defined as actual or potential resources held in excess of operational needs that could potentially help to sustain the business and adjust to any internal or external pressures ( Cyert and March, 1963 ; Nohira and Gulati, 1996 ; Zhong, 2011 ; Child, 1972 ; Dimmick and Murray, 1978 ; Mishina et al., 2004 ; Bourgeois, 1981 ). This definition of slack is consistent with the concept of ‘slack as a resource’ and addresses the utility of slack in the buffering (precautionary) function and in facilitating opportunities (e.g., Salancik and Pfeffer (1978) ; Baker and Nelson (2005) ; Mishina et al. (2004) ). However, according to the ‘slack as inefficiency’ view, slack is unproductive and thus costly ( Daniel et al., 2004 ; Stan et al., 2014 ; George, 2005 ; Tan and Peng, 2003 ; Bromiley, 1991 ; March and Shapira, 1987 ; Phan and Hill, 1955 ; Zhong, 2001; Almeida et al., 2002 ). Facing these two competing views, the discussion on the rationale underlying slack holdings and the optimal level of slack resources remains open in the academic debate ( Daniel et al., 2004 ; Natividad, 2013 ).

Following the ‘slack as a resource’ concept, financial slack is defined in the literature as the stock of liquid assets held by the business ( Mishina et al., 2004 ; Natividad, 2013 ). Thus, financial slack is often associated with so-called available slack, related to unabsorbed high-discretionary resources held as cash or marketable securities (the equivalent of cash) ( Nohira and Gulati, 1996 ; Bromiley, 1991 ; Beranek et al., 1995 ; McMahon, 2006 ).

Financial slack resources play a critical role in precautionary behavior, as due to its buffering function, financial slack determines the business’ risk-response abilities, if we consider liquidity tensions. Facing operating disruptions, the businesses may simply consume the holdings of financial slack to safeguard financial liquidity and dismiss the threat of bankruptcy (which was highlighted in Fig. 1 ).

In Fig. 2 , we provide a conceptual model that could support the analysis of risk preparedness driven by the buffering function of financial slack. The model merges two relevant dimensions of financial slack holdings. The first dimension is the actual size of financial slack resources as reflected by the holdings of liquid assets relative to total assets. The second dimension is related to financial slack behavior – accumulation or consumption. In the model presented in Fig. 2 , the highest degree of risk preparedness is attained by businesses that demonstrate financial slack holdings above the average levels and at the same time are distinguish by the ability to accumulate the financial slack resources over time. Accordingly, the lowest degree of risk preparedness is attained by entities that have relatively low (insufficient) slack holdings and at the same time demonstrate continuous consumption of existing financial slack holdings. The alternative situations (high holdings – consumed or low holdings – accumulated) signal moderate levels of risk preparedness ( Fig. 2 ).

Financial-slack-driven risk preparedness – conceptual heat map.

The model presented in Fig. 2 uses the traffic-light color system, which is a common color code in the illustration of risk heat maps ( Aven and Renn, 2010 ). Thus, the orange or red zones signal low risk preparedness and simultaneously a high degree of vulnerability to the consequences of businesses’ operating discontinuity, such as the liquidity tensions in the aftermath of the COVID-19 outbreak.

3. Research question development

It is beyond doubt that the COVID-19 outbreak and related lockdown has led to sudden and unexpected disruptions in operating activity of hospitality businesses worldwide. Thus, this exploratory study was designed to examine the risk-preparedness of hospitality businesses, driven by financial slack holdings and persistence, consistent with the conceptual framework presented in Fig. 2 . In this respect, this study explores the employment of financial slack in the buffering function, as a driver of precautionary behavior and as a relevant determinant of risk-response abilities.

The first research question addressed in this exploratory work is the following:

RQ 1. What is the degree of COVID-19 risk preparedness of hospitality businesses, in terms of their financial slack holdings and persistence?

This question is relevant, as the prior evidence on financial slack holdings does not provide clear guidance on the optimal level of slack and related slack behavior (accumulation or consumption). The reason is that holdings of financial slack are regarded as costly, as liquid assets are less productive ( Opler et al., 1999 ), which is consistent with the ‘slack as inefficiency’ view. However, in the risk-preparedness context, high financial slack is desirable due to its buffering function, which is consistent with the ‘slack as a resource’ view.

The problem of the tradeoff between the costs and benefits (in this buffering function) of liquid asset holdings (as financial slack resources) has resulted in numerous studies that attempted to lay foundations for theoretical and applicative concepts that could support setting the optimal level of financial slack ( Gentry, 1988 ; McMahon, 2006 ; Opler et al., 1999 ). These attempts addressed a variety of perspectives, and remained focused primarily on internally driven factors such as investment strategies, value creation abilities or conservatism of financial policies ( McMahon, 2006 ; Daniel et al., 2004 ). In this exploratory work, however, we address two issues that are critical for the development of efficient system intervention tools aimed at supporting the performance of the hospitality industry in the aftermath of COVID-19 consequences: businesses location and size. Thus, this study asks the second research question:

RQ 2. Is the degree of financial-slack-driven COVID-19 risk preparedness contingent on hospitality business’ location and size?

The business location (country) determines the most relevant drivers of the business’ operating environment. The possible contingency between the level of risk preparedness (driven by financial slack holdings and persistence) and business’ location is critical for the development of adequate system intervention tools, adjusted to these country-specific circumstances. The second item we address is the hospitality business’ size, as smaller companies are commonly regarded as more prone to the negative consequences of any disruption. Thus, smaller businesses tend to hold higher levels of liquid assets to smooth their cash flow volatility; there is empirical evidence in this regard (e.g., Ang, 1992 ; McMahon, 2006 ). The possible association between level of risk preparedness (driven by financial slack holdings and persistence) and business size is critical for tailoring the system intervention tools to the needs determined by the business’ scale of operating activity.

The third research question asked in this exploratory work addresses the interplay between financial slack holdings and a business’ performance. There is prior evidence that there is a direct association between the size of slack holdings and return on assets (ROA) or return on equity (ROE) (e.g., Smith and Kim, 1994 , and Zahra, 1996 ), which suggests that profitable firms tend to hold higher levels of financial slack. In other words, profitable businesses are able to accumulate financial slack resources over time. There is also strong evidence that there is a direct association between the size of slack holdings and borrowing capacity, captured by debt to assets ratios or liquidity ratios. Low borrowing capacity drives high financial constraints, and in these circumstances, firms are more prone to hold higher financial slack resources ( Acharya et al., 2007 ). Driven by this empirical evidence, this study explores the third research question:

RQ 3. Is the degree of financial-slack-driven COVID-19 risk preparedness contingent on hospitality businesses’ performance?

This question is relevant, as the COVID-19 outbreak has resulted in sudden discontinuity of hospitality businesses, impacting their ability to generate funds internally and negatively influencing their ability to obtain funds externally. The outbreak may also amplify the consequences of low borrowing capacity. By addressing the association of financial-slack-driven risk preparedness and the level of business profitability and borrowing capacity, the findings may potentially support the question on the desired duration of system interventions to be able to efficiently smooth the liquidity tensions of hospitality businesses.

4. Research design and method

Guided by the research questions, we designed our research as a gradual procedure, which is framed graphically in Fig. 3 . First, we clustered the hospitality businesses according to the degree of risk preparedness (with reference to the size and persistence of their financial slack holdings). Secondly, we explored whether the attained degree of risk preparedness is contingent on hospitality businesses location and size. The third stage was designed to capture the associations between the degree of risk preparedness and the performance of hospitality businesses. As liquid assets holdings are the main construct that determines the clustering scheme of risk preparedness, this stage was supplemented by the exploration of the of associations between the liquid assets holdings and the performance-related variables. Below we explain in detail the specification of the variables critical at each stage of this research procedure.

Design of empirical research.

Financial slack holdings. To determine the financial slack holdings, we followed the concept of slack as a resource ( Bourgeois, 1981 ) in its buffering function and ‘easy to recover’ approach ( Bourgeois and Singh, 1983 ). The financial (available) slack is associated with uncommitted resources that are maintained for immediate access. Thus, financial slack resources are empirically identifiable through the analysis of liquid asset holdings relative to assets (cash ratio) or alternatively by liquidity ratios or cash-inflow-based ratios ( Daniel et al., 2004 ). In this study, we follow the first approach (cash ratio); we measure financial slack holdings as the holdings of liquid assets (LQ) relative to total assets (A) ( Asimakopoulos et al., 2018 ; Combs and Ketchen, 1999 ; Bates et al., 2009 ; Kim et al., 2011 ). Liquid assets comprise cash and cash equivalents (held as short-term financial investments). Short-term investments are regarded as a ‘storage’ of liquidity and typically reflect the holdings of financial assets that could be easily and quickly converted into cash (marketable securities).

To distinguish between financial slack holders and nonholders, we compared the holdings of liquid assets relative to assets (as determined by LQ/A ratio) to the benchmark level established as the mean value of LQ/A for all companies included in the sample. This approach is justified by the observations from prior research that have confirmed the industry sensitivity to slack holdings ( Berger and Offek, 1995 ; Subramaniam et al., 2011 ). Accordingly, the mean value of liquid asset holdings relative to total assets (LQ/A ratio) was used to identify the cluster of hospitality businesses that can be distinguished by financial slack holdings above the average. To identify a cluster of the businesses distinguished by highly insufficient financial slack holdings, we additionally defined the bottom threshold equal to the first quartile of the LQ/A ratio. All businesses captured in between are regarded as a cluster of businesses of moderate financial slack holdings (see Table 1 ).

Financial slack holdings – specification of variables.

Financial slack persistence. To examine financial slack persistence, we used the data on the dynamics of the LQ/A ratio over time. In general, we classified as slack accumulators those businesses distinguished by an increase of liquid asset holdings relative to total assets (positive dynamics of LQ/A). However, to detect the persistence of financial slack accumulation over time, we analyzed the dynamics of the LQ/A ratio between 2016 and 2017 and between 2017 and 2018. Accordingly, if a business was able to increase financial slack holdings in two consecutive periods, it was assigned as a financial slack accumulator. In contrast, businesses distinguished by the negative dynamics of financial slack holdings (LQ/A) for two consecutive periods were classified as financial slack consumers. All other businesses were classified as inconclusive, as the direction of the dynamics of the LQ/A ratio was volatile in the two consecutive periods (see Table 2 ).

Persistence of financial slack holdings – specification of variables.

Risk preparedness. Further, driven by the conceptual framework presented in Fig. 2 , we defined the clustering scheme for demarcating between five degrees of risk preparedness (hereafter referred to as D_RP), based on the message behind the possible combinations of financial slack holdings and persistence. The details are presented in Fig. 4 . The cluster of very high (green zone) and high (yellow zone) risk preparedness captures the hospitality businesses of high or moderate financial slack holdings and slack accumulators or those with inconclusive persistence. The low (orange zone) or very low (red zone) clusters of risk preparedness capture the businesses of insufficient or moderate slack holdings combined with slack consumption or inconclusive slack persistence. The remaining combinations (amber zone) capture the businesses of moderate risk preparedness.

Matrix of the evaluation of the degree of risk preparedness (D_RP) – specification of clustering scheme.

Performance characteristics . Finally, to explore the associations between the degree of risk preparedness and performance of hospitality businesses, we examined the set of well-established financial ratios ( Table 3 ); see, for instance, ( Vivel-Búa et al., 2018 ; Hales, 2005 ; Brigham and Ehrhardt, 2011 ). We selected the financial ratios that are critical for monitoring the changes of companies’ borrowing capacity and profitability, as these aspects are the prime concerns in the aftermath of operating discontinuity. In general, the borrowing capacity of the business is primarily determined by its liquidity and solvency position. Accordingly, to control liquidity, we employed the current ratio of liquidity (CR), and to control solvency, we computed debt to assets ratio (D/A). Businesses distinguished by high levels of liquidity (CR) and low debt to assets ratios (D/A) demonstrate greater borrowing capacity ( Hales, 2005 ; Brigham and Ehrhardt, 2011 ). Profitability is measured with three basic ratios of return: on assets (ROA), on equity (ROE) and on sales (ROS), and by the analysis of the productivity of assets (PA). In general, higher levels of profitability ratios demonstrate better performance of the business ( Hales, 2005 ; Brigham and Ehrhardt, 2011 ). Additionally, we controlled the associations with sales revenues (SR), as the decrease of sales remains the direct consequence of the operating discontinuity.

The performance characteristics of hospitality businesses – specification of variables.

Holdings and dynamics of liquid assets are critical constructs in the clustering scheme for financial slack driven risk preparedness proposed in this study. Thus, we supplemented the empirical analysis by examining the associations between liquid assets holdings (LQ/A) and performance-related characteristics in the 2016–2018 time span. In this aspect, we follow the methodological approaches of a wide body of literature that aim at capturing the empirical determinants of cash ratio (LQ/A) by performing regression (e.g. Ozkan and Ozkan, 2004 ). For hospitality industry, regression for examining the determinants of cash ratio was applied by Kim et al. (2011) ; Ahmad and Adaoglu (2018) , or recently Demir et al. (2019) .

4.1. Data and sample selection

This exploratory study utilizes the data obtained from financial statements of hospitality businesses provided in the EMIS database (formerly known as ISI Emerging Markets, https://www.emis.com/ ). The EMIS database collects the financial entries of businesses operating in emerging markets, together with the major businesses’ demography characteristics (in this size, sector and location).

From the EMIS database, we obtained the data on the performance of the hospitality businesses operating in four countries: the Czech Republic, Hungary, Poland and Slovakia, to capture the country-effect. The reasoning behind selecting these countries was their homogeneity and comparability on several aspects relevant to this study. First, the Czech Republic, Hungary, Poland and Slovakia successfully underwent the process of transition from command to market economies and joined the European Union in 2004. As the members of the Visegrad Group (V4), these countries closely cooperate and are regarded as comparable on numerous dimensions of their economic performance ( Wyplosz, 2000 ). Moreover, these countries are perceived as equally popular tourist destinations ( Krzesiwo et al., 2018 ), in particular for winter sports, mountain walking and due to their historical heritage. Further, the percentage contribution of travel and tourism industry to GDP in these countries is relatively comparable (see the data provided in Annex, Table A1 ). Another reason for the exploration of hospitality businesses operating in V4 countries is that these countries were hit by COVID-19-related restrictions at nearly the same time, with similar interventions taken against the spread of the pandemic. The first COVID-19 infections were confirmed between the 1 st and 6 th of March, which was followed by the decision on border closures ca. 10 days later. In this respect, the hospitality businesses operating in the sampled countries were affected by the lockdown decisions and social distancing on a comparable scale. The travel restrictions should be regarded as potentially harmful for the hospitality industry in these countries, as the World Travel and Tourism Council ( WTTC, 2020 ) data for 2019 indicate a relative relevance of international spending related to tourism and travel activities in each of the sampled countries (54% in the Czech Republic, 76% in Hungary, 69% in Poland, and 51% in Slovakia).

From the EMIS database, we initially extracted data for all businesses actively operating in the period 2016–2018, providing travelers’ accommodations, lodging and other hospitality services (e.g., restaurants, other travel arrangements and reservation services). Under this request, we obtained 3290 observations (226 for the Czech Republic, 390 for Hungary, 206 for Slovakia and 2468 for Poland). Data for 2018 were the last obtainable entries. Thus, we assume that the situation observed in 2018 remained unchanged until the pandemic.

The obtained data were further verified to exclude all observations with missing or biased entries (e.g., entries for which the basic verification scheme for the balance between assets and liabilities was not maintained). The number of missing or biased records was considerably high in the subsamples of Czech and Polish hospitality businesses. Finally, we obtained a sample of 1154 hospitality businesses for further analysis of financial-slack driven risk preparedness (on non-parametric level), with complete data on slack holdings and persistence. For the empirical determinants of liquid assets holdings (cash ratio) we applied data for 2016–2018 time span, which initially offered 3436 firm-year observations. The descriptive statistics of the examined variables are provided in Annex ( Table A2 ).

The basic characteristics of sampled businesses, concerning size and location, are presented in Fig. 5 . To classify the businesses by their size, we followed the scheme recommended by the European Commission (2016) with respect to the number of employees. Accordingly, we distinguished between four business size categories: micro (employment up to 9 persons), small (employment between 9 and 49 persons), medium (employment between 50 and 249 persons) and large (employment of 250 persons or more).

The structure of sampled businesses by location (country) and size.

5. Results and discussion

5.1. financial slack holdings and persistence.

In the first stage of the empirical investigation, we conduct an entry exploration of the sampled hospitality businesses with reference to their financial slack holdings and behavior. On average, the sampled analyzed hospitality businesses hold 17.07% of their total assets as liquid assets (cash and cash equivalents), which is the mean value of the LQ/A ratio as on 2018. Holdings of liquid assets at a level higher than average was observed in 373 entities (nearly one-third of the analyzed sample, 32.3%), which defines the cluster of hospitality businesses with high financial slack resources. In the analyzed sample, there were 288 entities (25%) clustered as having insufficient slack holdings; their LQ/A ratio was below ca. 2.08% (the first quartile). All other businesses (493, or 42.7% of the analyzed sample) were classified as having moderate financial slack holdings. In Fig. 6 , we illustrate these values by placing the value of the LQ/A ratio for all observations, ranged from low values (0%) to maximum (100%). In addition, in Fig. 6 , we highlighted the mean and first quartile of LQ/A as the demarcation zones.

Holdings of financial slack in the analyzed sample of hospitality businesses.

To explore the financial slack behavior, in Fig. 7 , we illustrate the data on the dynamics of the LQ/A ratio for the analyzed sample of the hospitality businesses between 2016 and 2017 and between 2017 and 2018. These data were used to cluster the analyzed hospitality businesses in three groups based on the observed persistence of financial slack resources. In the analyzed sample of hospitality businesses, a majority (621, which is 53.8% of the observations) were captured as inconclusive, as the dynamics of liquid assets relative to assets was switching from positive to negative (330; 28.6%) or from negative to positive (291; 25.1%). However, the number of businesses identified as slack consumers (172; 14.9%) was considerably less than the number of businesses captured as slack accumulators (361; 31.3%).

Persistence of financial slack holdings in the analyzed sample of hospitality businesses.

5.2. Mapping the degree of risk preparedness (D_RP)

By combining the information on the size and persistence of slack holdings, further analysis was directed toward assigning the sampled hospitality businesses to the predefined clusters of risk preparedness. First, we analyzed the contingency between the size and persistence of financial slack holdings. A detailed contingency table is presented in Annex ( Table A3 ). The Pearson’s chi-square test confirms that there was a contingency between the holdings of financial slack and the level of financial slack persistence ( X 2 = 35.067 ; p < 0.000 ) . Data presented in Fig. 8 indicate that in the group of businesses with high financial slack holdings, the share of slack accumulators was visibly higher (41.8%) compared to the businesses with moderate or insufficient slack holdings (27.8% and 23.6%, respectively). This comparison clearly indicates that a relatively high percentage of slack holders was constantly sourcing their slack resources, by increasing the stock of liquid assets (relative to assets in total).

The contingencies between slack holdings and slack persistence.

Further, in accordance with the conceptual framework presented in Fig. 2 and methodical assumptions in Fig. 4 , we distinguished between five clusters of financial-slack-driven risk preparedness, ranging from 1 (very low risk preparedness) to 5 (very high risk preparedness). In Fig. 9 , we provide the numbers of businesses captured in each of 9 possible combinations of financial slack size and persistence, and their assignment to the given cluster of risk preparedness. In Fig. 10 , we graphically illustrate a percentage structure of hospitality businesses assigned to a given risk preparedness class. In Fig. 9 , Fig. 10 , we follow the color code consistent with the idea of heat map, moving from green (high risk preparedness), through yellow, amber, orange to red (low risk preparedness).

Number of hospitality businesses assigned to given degree of risk preparedness.

Overall structure of the degree of risk preparedness of the examined hospitality businesses.

This evidence suggests that the overall degree of COVID-10 risk preparedness of the examined hospitality businesses should be judged as relatively low (RQ1). The data clearly indicate that nearly 25% of the examined hospitality businesses fall into the cluster of very low or low risk preparedness, suggesting that one-quarter of the examined businesses are highly exposed to immediate liquidity tensions and a bankruptcy threat. The following 34% of the investigated sample was captured as having moderate risk preparedness. These businesses are also prone to liquidity tensions, as their financial slack holdings are either insufficient or recently highly consumed. A relatively positive observation is that nearly 40% of the examined businesses were captured as having good or very good risk preparedness. These businesses have maintained some flexibility during the period of operating discontinuity, as they possessed financial slack resources that could temporarily smooth the emerging liquidity tensions.

5.3. Risk preparedness and hospitality businesses’ location and size

We further explored the contingencies between the businesses’ degree of risk preparedness and their location (country of operating activity) and size to address the second research question asked in this study (RQ2). The data presented in Table 4 indicate that weak but statistically significant contingencies were observed between the degree of risk preparedness and businesses location but not their size (the Pearson’s chi-square test). The detailed contingency tables are presented in Annex ( Table A4 ) and summarized in Fig. 11 . In general, the percentage share of the hospitality businesses with high or very high risk preparedness remains comparable if we consider business size (Panel B). However, the cross-country comparisons clearly indicate that the percentage of businesses captured as having very low or low risk preparedness was relatively lower in the Czech Republic and Hungary, in comparison to Poland or Slovakia (Panel A).

Results of Pearson’s chi-square tests (contingencies between the degree of financial risk preparedness and businesses by location and size).

Notes: Statistically significant at **α = 0.01.

Structure of the degree of risk preparedness in the examined sample of hospitality businesses.

5.4. Risk preparedness and the hospitality businesses’ performance

To address the third research question asked in this study, we first explored the associations between the degree of risk preparedness (as a qualitative state) and hospitality businesses’ performance, by running non-parametric ANOVA (Kruskal-Wallis test) and establishing Rho Spearman correlations.

The Kruskal-Wallis test indicates that hospitality businesses captured in a given cluster of risk preparedness differed significantly on level of liquidity (the current ratio value). A closer analysis of mean ranks of the Kruskal-Wallis test (presented in Fig. 12 ) confirms that the businesses captured as having a higher degree of risk preparedness are distinguished by having better liquidity. This observation is also confirmed by the Rho Spearman correlation coefficient ( Table 6 ). With reference to the D/A ratio, the statistically significant differences were confirmed only between the businesses of very high (green zone) and low (orange zone) risk preparedness (with higher levels of D/A ratio observed in the cluster of low risk preparedness, which is consistent with the negative direction of Rho Spearman correlation coefficient for these variables.

Mean ranks of Kruskal-Wallis test for risk preparedness and selected performance characteristics of sampled hospitality businesses.

Notes: Statistically significant at ***α = 0.001; **α = 0.01; *α = 0.05

Rho-Spearman correlation coefficients.

Statistically significant at ***α = 0.001; **α = 0.01; *α = 0.05.

The data presented in Table 5 , indicate also that the hospitality businesses captured in a given cluster of risk preparedness degree differed significantly on their profitability – in particular, on return on assets (ROA), return on sales (ROS) and productivity of assets (PA). In the case of return on equity (ROE), statistically significant differences were observed only between the businesses of very high and low, and of moderate and low risk preparedness. The analysis of mean ranks of the Kruskal-Wallis test ( Fig. 12 ) indicates that the businesses of a greater degree of risk preparedness are distinguished by a higher level of returns or productivity of assets. The direction of these associations is also confirmed by the Rho Spearman correlations ( Table 6 ). As it can be seen in Table 6 , there is no correlation between degree of risk preparedness and sales revenues. However, the remainder profitability characteristics (return ratios ROE, ROA and ROS and productivity of assets in particular) are positively associated with risk preparedness, which indicates an indirect impact of the loss of customers and the related loss of sales revenues.

The results of the Kruskal-Wallis test (degree of risk preparedness and performance characteristics).

Notes: VH – very high risk preparedness (green zone); H – high risk preparedness (yellow zone); M – moderate risk preparedness (amber zone); L – low risk preparedness (orange zone); VL – very low risk preparedness (red zone); Statistically significant at ***α = 0.001; **α = 0.01; *α = 0.05.

In general, the results of nonparametric ANOVA show that hospitality businesses captured as having a greater degree of risk preparedness are distinguished by having better profitability and greater borrowing capacity (in particular, financial liquidity) positions. However, the long persistence of the COVID-19 outbreak consequences may lead to an evaporation of this advantage. Due to the loss of customers and related cash inflows, the storage of financial slack resources may also dry up in the better-situated hospitality businesses.

Liquid assets holdings are a main construct in the proposed clustering scheme of mapping hospitality businesses risk preparedness. In this respect, we additionally examined the determinants of liquid assets holdings as cash ratio (LQ/A). Following Kim et al. (2011) who studied cash ratio determinants for US hospitality industry, we applied WLS (weighted last square) regression as it can properly handle the problem of heteroskedasticity in cross-firm regressions. By applying the Breusch-Pagan test, we confirmed the heteroskedasticity (p < 0.000). Prior to estimating the WLS regression model, we established the pair-wise Pearson correlations between the variables (see Table 7 ).

Pearson correlation coefficients.

Notes: the performance characteristics in natural logarithm.

In general, liquid assets holdings (LQ/A) is positively correlated with productivity of assets (PA) and current ratio of liquidity (CR), and negatively correlated with debt to assets ratio (D/A), which is consistent with the prior observations on the relationships between degree of risk preparedness and the performance characteristics on non-parametric level.

Table 8 provides the results of WLS regression for the performance characteristics as the determinants of liquid assets holdings in hospitality businesses. The adjusted R-square value indicates that the model explains about 58,4% of the variation of liquid assets holdings in hospitality businesses. Following Kim et al. (2011) we performed two diagnostic tests to ensure there is no multicollinearity in our WLS regression model (VIFs < 10) and no autocorrelation which may occur with cross-time observations (Durbin-Watson statistics of 1.912. which indicates no serial correlation zone).

WLS regression model for determinants of liquid assets holdings.

Notes: The dependent variable LQ/A; all variables in natural logarithms.

Statistically significant at ***α = 0.001.

In general, the results of WLS regression are consistent with prior observations that businesses of higher profitability tend to hold more liquid assets. The sales-related characteristics (SR, PA, ROS or ROA) exert a positive impact on liquid assets holding in our model. This confirms that the sudden decline of sales revenues in the aftermath of pandemic may result in the inability to source the liquid assets holdings. There is also a relationship between the level of liquidity (CR) and liquid assets holdings, that suggests that the greater liquidity and the related borrowing capacity is stronger in hospitality businesses that distinguish with higher liquid assets holdings. The model found a positive association between the debt to assets ratio (D/A) as another indicator of borrowing capacity, which suggests that more financially constrained companies tend to hold more liquid assets. This is consistent with prior observations by Ferreira and Vilela (2004) , although the literature evidence is inconclusive ( Demir et al., 2019 ).

6. Concluding remarks

This study was designed to explore the degree of hospitality businesses’ risk preparedness for the consequences of COVID-19. The hospitality industry is undoubtedly one of the most severely affected by the coronavirus pandemic, as due to the system interventions taken against the spread of the disease, hospitality businesses were exposed to the severe consequences of operating discontinuities. This study explored these consequences from risk and financial management points of view by focusing on liquidity tensions in the aftermath of customer outflows and the related ability to sustain this critical situation and successfully recover from disruptions. The investigations explored the hospitality businesses’ risk preparedness as driven by financial slack holdings and persistence. The analysis has led to several conclusions that may potentially support the design of effective system interventions, as well as to enhance better managerial decisions on response and recovery routes.

6.1. Policy implications

Using sample data from hospitality businesses operating in four central European countries (Czech Republic, Hungary, Poland and Slovakia), the exploration has shown that the degree of financially driven risk preparedness is relatively low. The empirical analysis has confirmed that a low or very low level of risk preparedness was observed in the cases of approximately 25% of the analyzed hospitality businesses. These data indicate that one-fourth of the businesses are unable to sustain the immediate liquidity tensions that emerged shortly after the COVID-19 outbreak and thus are highly prone to bankruptcy. Moderate risk preparedness was observed in the case of a further 34% of the examined businesses. Thus, in general, nearly 60% of the examined businesses are vulnerable to the consequences of operating disruptions. This empirical evidence shows that there is an urgent need to implement hospitality industry-tailored solutions that could prevent consequences from the liquidity shortfalls.

This empirical evidence has shown that the degree of financial-slack-driven risk preparedness of the examined hospitality businesses was contingent on businesses location. It suggests that the design of system interventions directed at smoothing the liquidity tensions in the hospitality industry should be adjusted to the country-specific circumstances. The analysis performed in this study also indicates that the degree of risk preparedness is not contingent on the hospitality businesses’ size. Thus, possible intervention mechanisms should be equally weighted for all businesses, regardless of their size. These findings also indicate that the liquidity tensions faced by hospitality businesses in the aftermath of the COVID-19 pandemic may potentially hit businesses of different size on a similar scale.

6.2. Managerial implications

The study resulted in some observations relevant from the managerial perspective. In general, it was found that businesses captured as having a higher degree of risk preparedness were distinguished by having better profitability and borrowing capacity (in particular, liquidity position). These findings suggest that the businesses that currently demonstrate low and very low risk preparedness for sustaining the COVID-19 outbreak are far more exposed to the consequences of customer outflow (and the associated decrease in related revenues and profits) and the intensification of existing liquidity tensions. Managers who identify their individual businesses as of low risk preparedness should demonstrate a greater concern over controlling their operating costs and anticipating the potential difficulties in obtaining additional funding, if constrained. In these circumstances, managers should carefully consider the available system-level aid that could enhance the sustainability of their businesses. Finally, as particularly exposed to the bankruptcy threat, these businesses shall tightly monitor the innovations implemented by their competitors, to diminish the scale of customers outflow.

Facing the indecisive persistence of the COVID-19 pandemic, the situation may also significantly worsen in the group of hospitality businesses that currently demonstrate a relatively high or very high level of financial-slack-driven risk preparedness, as the COVID-19 pandemic is very influential on profitability and borrowing capacity. In this respect, the managers of the hospitality businesses that were able to safeguard the buffer of liquid assets shall be aware of the fragility of their competitive advantage. We observe that the countries manage with the persistence of pandemic, demonstrated by the consecutive waves of growing number of infections, by imposing some restrictions that affect the performance of hospitality industry. This study has shown that the restoration of slack holdings is particularly associated to the profitability or productivity of assets, which is driven by the ability to generate sales revenues. In this respect, the managers of the currently relatively well-suited businesses need to demonstrate prudential approach in their decision making.

6.3. Limitations and further research

The main limitation of this study is that due to the nature of the explored dataset, it reviews the risk preparedness observed at a single time point (end of 2018). This limitation has required the assumption that the contingencies observed as of the end of 2018 remained unchanged in the pre-COVID-19 period (end of 2019). Thus, further empirical investigations are required to confirm these observations as the data for 2019 are obtainable.

Another limitation of this study is the sample that explored the situation of hospitality businesses operating in four central European countries (Czech Republic, Hungary, Slovakia and Poland). Although the sample is homogeneous in the aspects relevant to this study, further inquiries will be made to verify the financial-slack-driven risk preparedness of hospitality businesses operating in other countries (in particular, those where the hospitality industry significantly contributes to the economy). The methodological approach developed in this study is supportive in this respect.

The findings of this exploratory work are also relevant for further inquiries addressing the details of system intervention mechanisms directed at limiting the negative consequences of the COVID-19 pandemic. Shortly after the COVID-19-related lockdown, the governments of some countries have implemented measures aimed at supporting entrepreneurs in mitigating the economic impact of the pandemic by addressing possible liquidity tensions. These measures embraced various solutions that support the maintenance of employees, loan instruments, deferral of loan repayments, and the release of taxation and social security obligations. However, there is a need to verify whether these overall intervention mechanisms were designed appropriately to meet the specific situation of hospitality industries, including in the temporal dimension.

This exploratory study also provides background for further research endeavors directed at a detailed analysis of the actual situation in the post-COVID-19 reality. In particular, further research will inevitably revise the scale of bankruptcy waves of hospitality businesses as liquidity tensions potentially emerge as one of the leading drivers. Moreover, by revising the situation of the hospitality businesses that were able to survive the COVID-19 consequences, in comparison to the disrupted ones, further studies may address the drivers of the successful recovery paths.

Acknowledgements

I gratefully acknowledge the insightful remarks and comments provided by the anonymous Reviewers and the Editors of the Special Issue.

Contribution of travel and tourism industry to GDP in the examined countries.

Descriptive statistics of the examined variables.

Notes: Descriptive statistics for variables as on 2016–2018 time span.

Contingencies between financial holdings and persistence.

Contingencies between financial slack persistence and businesses’ location and size.

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Industry Research

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Hospitality, Hotels & Restaurants

• Key Resources
• Trade Publications
• Associations

Below are some of the top resources for finding market and industry research:

Note: For general overviews and market research reports search for terms like: 

• Hospitality OR lodging OR hotel OR motel
• Restaurant OR fast food OR fast casual
• QSR OR quick service restaurant
• Food service OR bar OR tavern
• IBISWorld This link opens in a new window Industry Market Research reports and Industry Risk Ratings. Focuses on United States, but has some data on global markets.

Listed below are links to trade publications and relevant industry news:

Note: A trade publication (often a magazine) is an information source that is intended for a very specific audience and will have content that appeals to that audience. The content may come directly from people within the industry, or it may come from freelance or staff writers that have vast experiences writing for that particular trade.

Professionals often subscribe to trade magazines in order to gather valuable information that will help them achieve something within their industry or field.  Trade publications are a Marketer's secret weapon  and can be helpful for tracking recent industry developments, identifying competitors or uncovering market opportunities. 

• Hotel Business
• Hotel Management
• Hotels Magazine
• Lodging Magazine
• Full Service Restaurant (FSR) Magazine
• Nation's Restaurant News
• Quick Service Restaurant (QSR) Magazine
• Restaurant Hospitality
• Restaurant Owner
• Hospitality Technology Covers technology trends for restaurants and hotels.

Here's a list of important journals:

• Cornell Hospitality Quarterly

Below are links to key industry associations:

Note: If your industry is not represented here, search Google with your industry name + "association".  Not all content on these websites is free; you may need to be a member to access exclusive reports and data.

In some industries, associations might be referred to as;

• Guild OR federation OR society
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• Hospitality Sales & Marketing Association International Search under 'Knowledge Center' and 'Trends & Research' for free content.
• Hospitality.net Industry news and resources. Market reports include summary data from STR, RateGain (Hotel Rate Parity Trends) and TRI Hospitality Consulting.
• International Tourism Partnership "Environmental & social responsibility in the hospitality industry"; access provided by Hospitality Net.
• American Hotel & Lodging Association - AH&LA
• California Hotel & Lodging Association
• Hotel Association of Los Angeles

Restaurants & Food Service

• National Restaurant Association
• California Restaurant Association
• Food Service Consultants Society International
• Society for Hospitality & Foodservice Management
• Center for Culinary Development
• Deloitte - Transportation, Hospitality & Services
• U.S. Travel & Hospitality Outlook A 2019 report from Deloitte.
• Demystifying the Digital Marketplace: spotlight on the hospitality industry A 2018 report from the American Hotel & Lodging Organization.
• AMRC - Food Resources Agricultural Marketing Resource Center.
• Hospitality Trends News on the hospitality industry.
• Hotel Yearbooks Various editions and topics (technology; sustainability) published annually by Horwath HTL.
• PWC - Hospitality & Leisure Publications Registration required to download reports.
• STR Global -Smith Travel Research Industry news and travel glossary; reports available for sale.
• Technomic - Food Industry Facts & Insights Consulting See 'Complimentary Resources' for statistics and facts.
• Datassential
• AHLA - Research & Reports A variety of reports published by the American Hotel & Lodging Association.
• Hotel Market Trends & Analysis for the United States A 2021 report from Horwath HTL.
• State of the Hotel Industry, 2021 A 2021 report from the American Hotel & Lodging Association.
• Tourism & Hotel Market Outlook A 2021 report from Deloitte.
• State of the Restaurant Industry, 2021 Published annually by the National Restaurant Association.
• The Future of Restaurants A 2021 report from Square.
• U.S. Restaurants: 21 themes for 2021 A massive 2021 report from Credit Suisse.
• State of the Full Service Restaurant, 2021 U.S. industry overview from TouchBistro.

Find key government data, including reports and statistics using the following resources:

• Bureau of Labor Statistics - Industries at a Glance - Leisure & Hospitality See sub sectors: Accommodations & Food Services - NAICS 72 Accommodations - NAICS 721 Food & Drinking Places - NAICS 722
• U.S. Census - Statistics of U.S. Businesses Accommodation - NAICS-721; Food Services & Drinking Places - NAICS 722
• U.S. International Trade Administration - National Travel & Tourism Office Statistics on tourism, travel to and from the U.S.

For lists of hotel or restaurant rankings, consult the following:

• Nation's Restaurant News: Top 500 Published annually.

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Travel startups: Disruption from within?

Startups play an essential role in spearheading innovation that benefits consumers, businesses, and industries. But travel startups have been underfunded when compared to startups in other sectors. Looking back over the past 15 years, the travel and tourism industry received around 1 percent of funding for startups across all industries. 1 McKinsey analysis based on PitchBook Data, Inc.. This relatively low level of investment stands out in contrast to the industry’s size: Travel and tourism contributed to over 10 percent of global GDP in 2019. 2 “Travel & Tourism: Economic impact 2022,” World Travel & Tourism Council, June 14, 2022. These factors suggest that it’s a tough industry in which to raise money.

Despite these funding challenges, and unprecedented industry uncertainties, over $27 billion worth of investments were poured into travel companies from 2020 to 2022. In fact, in 2021, investment set a new record of just under $11 billion—indicating that investor appetite has not only returned to pre-COVID-19 levels, but even surpassed it.

About this research

Analysis is based on information obtained from the Phocuswright startup database. Funding was analyzed from 2005 to 2022 YTD (including November 2022), based on a sample of 3,865 startups. This included 6,395 funding rounds, accounting for $76 billion in funding (exhibit).

Given this context, a new report Travel startups: Disruption from within–or not? presents an overview of the travel startup environment, and how the funding landscape has evolved across geographies, and across the different types of travel startups. Analysis is based on information obtained from the Phocuswright startup database and draws on insights from industry executives (see sidebar, “About this research”).

The report examines the kinds of investors that are funding these startups—and the types of businesses they choose for investment. It also puts forward possible future scenarios that would have implications for travel companies and stakeholders in the startup space. This article presents some of the key findings.

Fewer travel startups are attracting funding, but when they do, they secure a substantial amount

Even though funding may be hard to come by, compared to other sectors, investors are interested in travel and tourism. Investment in travel startups has returned to pre-pandemic levels and has even surpassed record-breaking years in the past, such as 2015 and 2019. These peaks were achieved through significant acquisitions that may have consolidated the market. For instance the online travel agency Expedia acquired HomeAway for $3.9 billion in 2015. 3 “Expedia to acquire HomeAway, Inc.,” Expedia media statement, PR Newswire, November 4, 2015.

Furthermore, funding per round has increased over the past decade from an average of around $4 million in 2010 to $20 million in 2022, with the steepest increase seen during the pandemic (Exhibit 1). This indicates that fewer travel startups could be attracting funding, but when they do, they secure a substantial amount. In essence, the relatively small amount of funding that exists is shifting toward fewer startups.

Funding has shifted toward more mature startups

Q&a with johannes reck, ceo of getyourguide.

Johannes Reck is CEO of GetYourGuide, a Berlin-based online travel agency and online marketplace for tours, attractions, and excursions. The company’s website and app connects travelers with activity providers around the world, offering thousands of products in more than 20 languages, and 40 currencies. He shares his views on the investment landscape for travel startups:

What patterns have you noticed regarding investment in travel startups?

At a high level I would say that too little VC money flows into travel altogether, probably due to the market cap that has been realized, and that startups in the scaling phase still have to demonstrate profitability to attract funding. It’s also important not to generalize the way we think about startups—they range in size and maturity from two employees to major disruptors. Essentially, if innovation is not yet proven, then there is little or no money coming in, and this is especially true in Europe.

Are certain types of startups attracting more investor interest than others?

There are category leaders emerging in many areas, such as flights, accommodation, and experiences. I think investors have no appetite to pour money into a number three or four in any given category. And because of the global network effect in travel, it’s really difficult to design a new category. For instance, the chance that a new company could fundamentally disrupt an established concept such as Airbnb, or Booking.com, is limited because of the network effect that locks in global supply and demand—and that’s what makes category leaders so defensible.

Furthermore, there is a perception that as large firms are so big, they can do everything, and that may scare away a lot of investors from betting on a smaller innovative company. The presence of large incumbents may stifle innovation—but startups have a central role to play in this regard and can benefit the entire industry.

What role do you think travel companies could play in the startup landscape?

I think travel companies have to invest in innovation now, otherwise they could be worse positioned in a future crisis. Essentially, travel companies could look at how investing in startups could strengthen all areas of their value chain. They could also focus on the value that innovation will bring to the industry, instead of investing only with profit in mind.

That said, there may be room for travel companies to look at M&A. There is much less competition, compared to pre-COVID-19, and acquisition is now much more efficient. This means that companies could be in a position to grow—much faster and with less effort.

Across industries, later-stage funding (i.e., Series B, C, D) has made up the majority of startup investment (Exhibit 2). Between 2020 and 2022, more acquisitions (e.g., Getaroom.com and On Location Experiences) and public financing rounds (e.g., Sonder and Vacasa) took place than in previous years. This could be symptomatic of a trend: Investors may want to back category leaders that have reached scale (See sidebar, “Q&A with Johannes Reck, CEO of GetYourGuide”).

Hospitality startups remain the leading category for investment

Most recent funding has been channeled to hospitality startups, making up 49 percent of investment between 2015 and 2019, and 41 percent between 2020 and 2022. This is likely due to the rising popularity of short-term rentals. Startups providing services for short-term rentals, such as Airbnb or AvantStay, accounted for 55 percent of hospitality startup funding in 2021.

Business travel startups doubled their share of investment during the pandemic, and within this category, startups in the corporate segment, such as the expense-management software provider Divvy, secured 98 percent of funding between 2020 and 2022. The MICE segment received the remaining 2 percent, likely due to the decrease in events during the pandemic.

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In the same period, booking and transport startups lost some share of funding as investor priorities may have shifted during the crisis. In the booking category, online travel agency businesses secured 90 percent of funding.

Overall, the pre-trip category remains the least funded, having attracted 1 percent of total funding in the past seven years. Within this category, startups in insurance attracted 84 percent of funding in 2021 (Exhibit 3).

Travel companies account for a relatively small percentage of travel startup funding

Since 2015, five categories of investors have funded travel startups:

• Angel and private investors: These investors oversaw 138 rounds of capital raising totaling $3.6 billion between 2015 and 2021.
• Banks and the public sector: These institutions oversaw 125 funding rounds, totaling $6.4 billion. Much of this funding took place in 2021, likely due to pandemic-related bailouts and large rounds of debt funding.
• Venture capital (VC) and VC-orientated private equity (PE) firms: This group raised 2,090 rounds of funding, totaling $72 billion.
• Travel companies: These are frequently in-house incubators or joint ventures that provide potential businesses with direct support. Travel companies raised $7.8 billion in investment through 389 rounds.
• Non-travel companies: Despite not being in the tourism sector, these companies raised more money ($12.5 billion) in 264 rounds than their travel-industry counterparts.

Overall, VCs have been the leading investor category, and spent nine times more than travel companies in 2021. Since 2015, travel companies accounted for a relatively small percentage of startup funding, and this has decreased in recent years, dropping from 18 percent in 2020 to 5 percent in 2021.

Between 2015 and 2019, VCs and PEs invested at least twice as much per funding round compared to travel companies. Average funding size was roughly $37 million for VCs and PEs, compared to $17 million for travel companies. This leveled out between 2020 and 2022 where both groups invested approximately $30 million on average per funding round.

In 2021, banks greatly increased their investment share and matched VC investments, likely driven by increases in debt funding (Exhibit 4).

The travel industry could benefit from supporting startups

To date, travel companies have played a very small role in investing in the industry. As startups generally spearhead innovation, travel companies could take up opportunities to support startups—and reap the benefits. Furthermore, by not supporting, or finding ways to engage other players in the industry, travel companies may be missing an opportunity to shape the next generation of travel businesses. And as the investment landscape becomes tougher, travel companies are well placed to ensure that the innovation pipeline continues to flourish, even if VCs and larger players withdraw.

Travel companies could become more involved in investing in the industry and bring their expertise to bear on innovation and the sorts of capabilities and technologies that may be needed. And they stand to gain from leveraging startup capabilities in-house. Research into collaboration between corporates and startups in other industries shows that both parties stand to benefit. Startups can benefit from corporate funding, resources, and customer access, while corporates may need the innovation that startups offer to stay ahead of competitors and disruption, and also to access new technology. 4 “Collaborations between corporates and startups,” McKinsey, May 2020.

Three possible future scenarios could materialize in light of the trends in travel startup funding.

• Incumbent-driven consolidation: In this scenario, sustained emphasis on short-term profitability due to inflation and increasing cost of capital would make it difficult for travel startups to attract funding and gain ground in the industry. Funding rounds would be smaller due to early exits, closures, bankruptcies, or consolidation by established and scaled technology-driven firms. Established players would focus more on developing products and services that can be scaled globally and less on optimizing backend processes where rapid scale-up is potentially more challenging, such as manual check-in processes in hotels. This situation would lead to less innovation across the industry. In the long run, reduced innovation due to less startup diversity may require more in-house innovation for optimizing backend processes and technology.
• Emergence of multiple niche startups: Early-stage startups would see sustained and potentially increased funding, while funding for startups in the later stages would plummet. This could lead to an exit wave across later-stage startups due to bankruptcies. At the same time, a wave of new, more diversified, startups could emerge that aim to tackle a variety of niche problems in the industry, such as core technology elements. The result could be an even broader but more fragmented ecosystem of new industry players, leading to higher levels of innovation throughout the industry. Travel companies could acquire distressed startups, at lower valuations, which would boost in-house innovation and allow incumbents to provide new offerings.
• Travel startups golden 20s: In this scenario, travel startups across all growth stages and categories would see continuous increases in funding and growth. There would also be an increase in larger investments aimed at developing technology and core industry processes such as AI-enabled fulfillment, and disruption management. Innovation could flourish across the industry. In this fast-growing landscape, competition for funding would intensify and investors’ expectations around performance could increase. At the same time, collaboration would become more complex due to the diversified landscape of partners and suppliers. Established businesses would need to build in-house innovation capabilities organically or acquire them. Differentiation would become more difficult and several leading incumbents may be replaced by new challengers in the market.

However the future pans out, support for startups can boost innovation and strengthen the travel and tourism value chain, for all participants.

Giuseppe Genovese is a consultant in McKinsey’s Dallas office, Evgeni Kochman is an associate partner in the Frankfurt office, Vik Krishnan is a partner in the San Francisco office, and Nina Wittkamp is a partner in the Munich office.

The authors wish to thank Karel Dörner, Markus Berger-de León, Patrick Naef, and Christian Dominka, for their contributions to this report.

The authors also wish to thank Hollis Thomases, a senior research analyst at Phocuswright, Chetan Kapoor, a research analyst Asia Pacific at Phocuswright, and Johannes Reck, CEO of GetYourGuide.

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CitizenM Explores Potential Sale as Hotel Chain Seeks Capital

Sean O'Neill , Skift

March 27th, 2024 at 11:38 AM EDT

CitizenM is looking for new growth capital. Might it sell to one of the large hotel groups?

Sean O'Neill

CitizenM , a premium economy hotel chain, has engaged bankers to review a possible sale of either a minority stake or the entire company, according to a report in the Financial Times Wednesday. The owners are being advised by Morgan Stanley and Eastdil Secured.

“We can confirm that CitizenM is looking for new growth capital,” a spokesperson told Skift. “Nothing further to add.”

The Dutch hotel company’s owners include Dutch pension firm APG, Singapore’s sovereign wealth fund GIC, APG Asset Management, and KRC Capital, a private equity firm founded by CitzenM founder Rattan Chadha.

In early 2019, GIC took a 25% equity interest in CitizenM off what it said was an enterprise value of about $2.3 billion (€2 billion).

In 2021, the company raised $1 billion from existing investors to expand post-pandemic. More than half of the hefty sum went toward expanding the brand, which has doubled in size to 40 properties and 10,000 rooms over five years.

Selling a stake or the whole company could enable some shareholders to recover some of the money they’ve invested and possibly collect gains.

CitizenM is a fully integrated hotel real estate developer and hotel operator. That business model puts it at odds with the major hotel groups, which have been shedding assets in an asset-light strategy favored by Wall Street.

A more likely buyer might be another investment entity. Saudi Arabia’s Public Investment Fund has acquired a significant minority stake in  Rocco Forte Hotels , the operator of 14 luxury properties, in December. The deal valued the portfolio at $1.8 billion, including debt . In 2022, Cain joined Saudi Arabia’s Public Investment Fund in a $900 million investment in Aman Group.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at?  The performance of hotels and short-term rental sector stocks within the  ST200 . The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200)  combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

Read the full methodology behind the Skift Travel 200.

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Photo credit: Lobby at the Miami World Center CitizenM Hotel. Source: CitizenM.