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Hotel Development Insider

  • DCH News Team

The Hotel Industry's take on the Omicron variant.

Updated: Dec 1, 2021

We’re still weeks away from knowing just how much of an impact the Omicron variant will have on the travel industry. But companies can already discern just how much of a role government can have in altering the course of recovery.

It only took less than three weeks to go from major hotel CEOs predicting a record-setting 2022 to a new coronavirus variant ushering in fears of another travel sector nosedive.

The Omicron variant, first detected in southern Africa last week, sparked a global spree of travel bans and restrictions in recent days on international arrivals from several African countries. Global leaders like U.S. President Joe Biden Monday labeled Omicron a “variant of concern” while also stressing it is not one to panic about.

But it is already evident Omicron is a speed bump in the travel industry’s recovery path.

Even though it is early days in being able to predict how the new variant will impact the world, Omicron is another reminder government response — overreactions, some say — can throw off a hotel recovery many saw as finally just getting global momentum.

“Government overreaction and government interference in travel is going to be the long-lasting legacy of Covid, and I think that is a bit of what we’re seeing this time around,” said Richard Clarke, a managing director covering global leisure and hotels at Bernstein.

He noted it is early to discern much about the new variant.

“Pre-Covid, there would probably have been no one who would have thought that governments had the particular power or would be aware of the power to sort of just ban flights and shut down borders for health reasons,” Clarke said.

Countries such as the U.S., Israel, and the UK labeled their newly unfurled travel restrictions as initiatives meant to buy time to better understand the variant and prepare for any pending case surges. Many of the countries doing the banning have higher case counts, albeit of the earlier Delta variant, than the nations they are temporarily banning from international travel.

The fresh round of targeted travel restrictions arrived weeks after more international borders reopened. For example, the U.S. once again allowed the entry starting in early November of vaccinated foreign travelers from 33 countries, including South Africa. The hotel industry widely viewed this move as a crucial step in the recovery of properties in major cities that counted on international travelers filling up guest rooms.

Travel restrictions were once seen as a much-needed mitigation strategy against the spread of the virus, and some argued for earlier government action in sealing off borders. Closed borders were one of the few tools at the disposal of governments before the rollout of vaccines and booster shots.

But industry chatter in recent weeks zeroed in on the practicality of government restrictions and potential overreach when it came to pandemic restrictions. China’s zero tolerance policy toward new cases, once heralded as a global example, soured into an economic liability.

The country had the best-performing hotel industry for much of the pandemic recovery, but even European hotels — seen as a laggard for their reliance on long-haul travelers — have outperformed those in China in recent weeks.

But the emergence of a new wave of targeted international travel restrictions around the world, for however long it may be, is a grim reminder hotel companies and other travel entities may have to sleep with one eye open going forward.

“That’s what I’m worried about, that it’s going to change human behavior so the longer term thinking is to always be worried,” Clarke said. “The post-Covid world can close. That power has been let out the bag.”

He’s not the only one expressing concerns on governments impeding the industry’s ability to navigate the recovery.

The CEOs of Marriott, Hilton, and IHG predicted earlier this month at the NYU International Hospitality Industry Investment Conference a significant throttling forward in their respective recoveries during 2022.

But Accor CEO Sebastien Bazin, whose company has a lot of exposure in Asia Pacific and Australia — two areas with tougher reopening guidelines than Western countries — wasn’t as rosy.

“I simply don’t know,” Bazin said of Accor’s 2022 outlook pre-Omicron when the Delta variant was the main cause of ire. “I’m depending on vaccination rates and government officials, and I hate it.”

The new wave of travel restrictions rallied calls for vaccine equity, an issue reported throughout the year by Lebawit Lily Girma, Skift’s global tourism reporter. Vaccine hoarding by Western countries left much of Africa without access to doses in initial rollouts.

Only about 10 percent of people in Africa have received at least one dose of a coronavirus vaccine compared to 64 percent in North America and 62 percent in Europe, according to the New York Times global vaccination tracker.

It would seem vaccine equity would be a stronger mitigation effort against this and future variants than economically damaging travel bans.

South African leaders strongly condemned countries around the world Monday for enacting travel bans on much of Southern Africa.

Joe Phaahla, South Africa’s health minister, per the Times, relayed a conversation to reporters Monday he had with the U.S. health and human services secretary: “What you can do is to say to your president and your government that the travel bans are not helping us, they’re just making things more difficult.”

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