“It’s impossible to know how many of these shuttered hotels and hostel will reopen.”
“After hitting rock bottom, we finally appear to be turning the corner. At this rate, by the end of May we may even break even for the month, for the first time since March last year,” says Pol. He and his two partners own Hostal Live Barcelona, a small two-floor hostel in the center of Barcelona that was closed for 12 months, from March 2020 through February 2021.
“We have no idea when, if ever, we’ll be able to rent the rooms at the sort of prices we were charging in 2018. But for now at least the worst appears to be behind us — barring another cataclysm,” he said.
It was touch and go for a while. The only reason Hostal Live is still a going concern is that Pol and his two partners had capital to draw upon when the virus crisis hit. That capital was supposed to be used to expand the business. Instead much of it was used to keep the business alive:
“As our bank manager told is in March, the only reason we qualified for an emergency loan is that we had no debt on our books and we had savings backing us up, which we had planned to spend on buying another hostel,” he said. “We may still have that opportunity at some point further down the line. For the moment we are counting our blessings; many of our competitors didn’t make it this far.”
Pol and his partners also owe a debt of gratitude to the Spanish government’s furlough program, which has paid out 70% of their workers’ wages and most of their social security costs for 14 straight months. The workers are still on furlough though Pol and his partners are now covering the limited hours they’ve been working since the hostel reopened.
Another lifeline was provided by the landlord, who in the fall agreed to a 50% reduction in rent for six months. When that period came to an end, he agreed to extend the conditions for another six months.
Hostal Live finally reopened its doors, albeit to only one of its two floors, in early March. At that time Spain’s economy was still in partial lockdown, non-essential travel between regions was prohibited and a 10 o’clock curfew was still in place. And there were virtually no tourists at all in Barcelona.
“The timing may seem strange,” says Pol. “But we wanted to make some big changes to the hostel before properly reopening to foreign visitors. Most importantly, we wanted to install and test out a contactless key system so that our guests could access reception, their rooms and other hotel areas with their phones. This would help to minimize contact between guests and members of staff for as long as this pandemic lasts.”
But to fill its rooms at a time of almost zero tourism, Hostal Live had to offer historically low prices. In March, that meant charging an average price of €30 room per night, less than half the average price for a normal month of March. But the plan worked: people came to fill the rooms, albeit not from as far and wide as usual.
“With the exception of a few French tourists, almost all of the guests were Spanish. During the week we catered to workers who had come to Barcelona for the day and suddenly found themselves in need of a bed for the night. At the weekend we tended to attract young couples, often from the suburbs surrounding Barcelona, who had pleasure rather than business on their minds. By the end of the month we had achieved an occupancy rate of 15%.”
That may seem pitifully low but it was better than nothing, especially considering that most hotels in Spain were not even open…
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