Looking for a far-off light

Some sectors are making a brave attempt to spot some shoots of opportunity amid all the chaos. But there are others who, through no fault of their own, have plunged headlong into the abyss — and hospitality and property are right up there.

Property is likely to be changed forever by the realisation that the old model of commuting for hours to sit in a giant tower all day with thousands of other wage slaves is going the way of the dodo now that many industries can function quite happily on Zoom.

Hospitality will clearly rebound in some form, but for the moment the sector has completely shut down. Many less well-resourced operations are going to go bust, and the future is likely to be much more local than long-haul.

This is all poor news for the Hospitality Property Fund, which spells out clearly, in its name, what sectors it is focused on. It is a real estate investment trust (Reit), investing in the hospitality sector, with a portfolio of 54 properties with over 9,000 rooms in SA, and they’re all empty.

Its properties are diversified geographically as well as into luxury, full service and economy groupings, and it was trundling along just fine until the pandemic struck and travel stopped. Now the focus is on conserving cash, reducing costs, postponing all capital expenditure and conducting only essential maintenance.

All it can do is hope to ride out this period of zero income without suffering terminal damage, and hope that it’s still around when travel opens up again, in whatever a straitened guise that turns out to be.