JAKARTA - Hotel owners in Asia are pivoting to debt financing to increase cashflows in order to support their balances amid the crisis triggered by the coronavirus pandemic (COVID-19), Jones Lang LaSalle's (JLL) research finds.
According to JLL Group Hotels & Hospitality Executive Vice President Adam Bury and Senior Vice President Corey Hamabata, travel restrictions imposed to curb the spread of the virus have forced hotel owners to mull several short-term financing options.
"We see concreted efforts to mitigate the potential for loan default, or worse. Many owners are immediately seeking additional credit lines in order to stabilise their businesses and temper the downturn until demand returns," Mr Bury said in an official statement received by IDNFinancials.com, Monday (18/5).
The resort segment, he added, is likely to experience the slowest recovery due to its dependence on international guests. JLL predicts that debt financing will be required by a number of resorts in Thailand, Indonesia, Vietnam, and the Maldives.
"Where these short-term fixes can’t be achieved, there is potential for distressed assets to come to market in the second half of 2020," Mr Bury remarked.
"Post-COVID, we will likely see limiting of future new supply and firming up of balance sheets of those who are able to survive the downturn, ultimately resulting in stronger fundamentals for the industry going forward."(MS)