Oyo suspends payments to hotel owners, letter states
India-based Oyo has written to hotel owners invoking the “force majeure” clauses on their agreements, citing the COVID-19 pandemic’s severe impact on the business of their hotels, according to the Economic Times.
In the letter, Oyo states that since hotel revenues have significantly dropped and are unlikely to improve in the next few months, the company will exercise its “force majeure” rights in suspending payments of the monthly benchmark revenue or any other amounts payable to owners.
Accor takes action
In addition to closing Accor branded hotels worldwide (likely over two-thirds will be closed) in the coming weeks, the company has released a statement outlining other internal measures it’s taking in light of the coronavirus pandemic, including:
• A travel ban, hiring freeze, reduced schedules and/or furloughing for 75% of global head office teams for Q2, resulting in a minimum €60 million (US$65 million) reduction in general and administrative expenses for 2020
• Streamlining all other costs (i.e. sales, marketing, IT), in line with lower systemwide revenues
• A €60 million (US$65 million) reduction in capital expenditures
On Friday, Accor’s board of directors also decided to withdraw its proposal for a 2019 dividend payment of approximately €280 million (US$305 million). After consulting with the group’s main shareholders, JinJiang International, Qatar Investment Authority, Kingdom Holding Co. and Harris Associates, Accor decided to allocate 25% of that planned dividend, some €70 million (US$76 million), to the launch of the “All Heartist Fund” for the group’s 300,000 employees; it allocates resources for COVID-19-related hospital expenses, as well as for those who do not have social security or medical insurance. ?Accor Chairman and CEO Sebastien Bazin will also forego 25% of his compensation during the crisis. The cash equivalent will also be contributed to the newly created fund.
India’s occupancy drops
India’s daily hotel occupancy dropped to 11% during the period of March 23-29, according to preliminary data from STR. Along with a steep downward trend in occupancy, ADR and RevPAR have also dropped significantly in India. ADR, which has decreased year over year by roughly 20% or more for eight consecutive days, went as low as INR4,924.18 (US$64.75) on March 28. RevPAR reached its lowest absolute level at INR537.54 (US$7.06) on March 22.
Crown Resorts inquiry postponed: A suitability probe by the New South Wales government into Crown Resorts has been indefinitely postponed due to coronavirus. Australia-based Crown, which is building an A$1.5 billion (US$898 million) resort in Sydney, is being investigated around whether it should have a gaming license due to alleged exposure to organized crime.
Elsewhere: Lone Star takes Unizo for US$1.9B
U.S. buyout fund Lone Star has closed on a US$1.9 billion deal for hotel chain Unizo Holdings, ending a nine-month bidding war among global investors including Blackstone Group and Fortress Investment Group. In a statement, the hotel chain said the Dallas-based Lone Star, together with a group of Unizo employees, secured 86.6% of outstanding shares in an open bid that started in December.
