U.S. Hotels Brace for Coronavirus Impact
Herrick Real Estate partner Yariv Ben-Ari, who represents hotel owners, operators and lenders, was quoted in an article in The Real Deal examining the impact the coronavirus has had on the hotel industry. The article mentions that Yariv stated, "so far the coronavirus does not appear to have affected hotel financing deals or hotel valuations" and that he believes the "greater threat will come from the near-term impact to hotels themselves...that will include large-event cancellations as vendors, suppliers and guests find it increasingly difficult to travel."
"People are looking to see what their rights are both on the hotel and venue side … should the virus impact the industry more closely, particularly in the U.S.," said Yariv. And when discussing the topic as to whether companies could rely on their business insurance to help cover revenue losses incurred from epidemics, Yariv stated, "[m]any are looking into it, but it’s not typically covered[.]" "Force majeure" clauses — meant to cover unforeseeable events that might allow someone to exit a contract — tend to reference specific situations...Epidemics like the coronavirus outbreak usually aren’t covered[.]"
Yariv noted that, fortunately, his clients have not seen any instances of hotel event cancellations and added that "the real challenge is travel and coming to the U.S."