Partial Operations, Full Complexity
- 19 hours ago
- 7 min read
Running a Hotel at 10 to 20% Occupancy in a Conflict Zone
The hardest hotel to manage is not the one that is closed. A closed hotel has clarity: secure the building, maintain essential systems, retain a skeleton maintenance crew, and wait. The financial hemorrhaging is significant but predictable. The decisions are painful but simple.
The hardest hotel to manage is the one running at single- or low-double digit percent occupancy.
Across the Middle East, hundreds of hotels are in this operational purgatory. Not empty enough to justify full closure. Not busy enough to sustain anything resembling a normal operating model. Every day, general managers and asset managers face a cascade of micro-decisions that collectively determine whether the property is preserving its value or slowly destroying it.
During COVID-19, we published frameworks for temporary hotel closures and crisis housekeeping protocols that helped owners navigate similar decisions. But the current situation presents a distinct operational challenge: the demand that remains is not merely reduced; it is radically different in character. The guests in your hotel right now are not leisure travelers on shortened trips. They are government officials, military contractors, humanitarian workers, journalists, and displaced corporate tenants. Each segment has different needs, different risk profiles, and different willingness to pay.
The Decision: Stay Open, Close Entirely, or Something In Between
Before addressing how to optimize partial operations, every owner should first answer a more fundamental question: should this property be open at all?
The answer depends on four variables: your cash runway (Article 1 provides the framework), your contractual obligations (some management agreements impose penalties for owner-directed closures), your insurance position (partial operations may affect business interruption coverage differently than full closure), and the character of your remaining demand.
If your property is generating enough revenue to cover its marginal operating costs (the incremental cost of keeping the doors open versus the cost of being fully closed) then partial operations are financially justified. If it is not, every day you remain open is a day you are paying for the privilege of losing money. In that case, a structured temporary closure, executed properly, preserves more value.
Consolidation: The Operating Model for Survival
Floor and Wing Consolidation
The single most impactful operational decision at low occupancy is physical consolidation. Consolidating occupied rooms onto a single floor or wing reduces housekeeping labor, dramatically cuts energy consumption, simplifies security coverage, and creates a perception of activity that benefits the remaining guests psychologically. An occupied floor at 60% feels like a functioning hotel. The same number of rooms scattered across ten floors feels like a building in decline.
Execute this systematically. Identify the floors or wings with the newest FF&E and best mechanical systems. Move all guests there. Mothball the remaining areas with a defined protocol: HVAC set to minimum maintenance levels, water systems flushed weekly to prevent stagnation and legionella risk, fire suppression inspected and maintained on schedule, and clear signage preventing unauthorized access.
F&B Outlet Consolidation
If your hotel operates three restaurants, a lobby lounge, a pool bar, and room service, the correct number of outlets at 15% occupancy is one. Possibly two if you retain a meaningful external food and beverage audience. Consolidate to your most versatile outlet (typically the all-day dining restaurant) and simplify the menu to reduce procurement complexity, waste, and kitchen labor.
This is not a quality compromise; it is a focus decision. A single well-run outlet with a curated menu, fresh ingredients, and adequate staffing creates a vastly better guest experience than three understaffed outlets serving reheated preparations from an overextended kitchen. Your remaining guests, many of whom are on extended stays, will eat in your restaurant every day. Make it good.
One consistent pattern we observe: operators' staffing decisions during a crisis tend to protect the roles that serve the operator's infrastructure — the higher-paid management roles dealing with brand compliance, centralized reporting, and regional oversight, while cutting the visible rank & file roles that serve the property's guests. An independent review of your operator's proposed skeleton crew, conducted by someone who understands both the operational minimum and the owner's commercial interest, frequently identifies significant savings that the operator's proposal leaves on the table.
A Critical Difference from COVID: Do Not Strip Services
During the pandemic, many services were cut back and accepted (at least initially) by customers in the name of social distancing and guest safety. The once-invincible Gulf hotel buffet was eliminated almost overnight. In rare circumstances, even breakfast service at luxury hotels was removed, along with valet parking and daily housekeeping. Guests tolerated these reductions because they understood the health logic behind them.
This crisis is different, and the same approach to service reduction will not fly. In fact, the dynamic is entirely reversed. Guests staying in a hotel during a regional conflict do not want fewer services. They want more. They want to remain within the building's security envelope and will prefer to in-source as many services as possible rather than venturing out into a city where the security situation is uncertain. Room service becomes more important, not less. The restaurant needs to be open longer, not shorter. The gym, the business center, the lobby lounge: these are not luxuries during a conflict stay. They are the reasons the guest chose a hotel over an apartment.
This is the moment for properties that can credibly offer a resort-within-the-city experience: a self-contained environment where the guest can eat, work, exercise, relax, and feel secure without leaving the building. Urban hotels that can pivot to a resort strategy, offering all-inclusive or enhanced-service packages, will retain and attract guests who might otherwise leave the country entirely.
Towers, Resorts, and the New Geometry of Safety
The conflict has produced innumerable videos of drone and missile strikes on tall buildings, including hotels. Whether or not these strikes cause significant structural damage (and in most cases within the Gulf, the actual damage has been negligible), the visual impact is profound. A drone hitting a glass-clad tower generates images that circulate globally within minutes and embed themselves in the consciousness of potential travelers.
This creates a parallel to the post-COVID dynamic around property types, though the underlying logic is different. During the pandemic, horizontal resort layouts signified social distancing and safety, while vertical towers signified density and risk. That was a supply-side driver: the building's physical form communicated safety. But there was also a demand-side driver that mattered just as much: people had been stuck at home for months and were desperate to get out. The so-called "Zoomtowns" boomed as technologically equipped remote workers opted for easy outdoor access and distance from urban density. The combination of favorable supply form and pent-up demand for open space drove resort and rural properties to outperform urban high-rises significantly.
In today's security environment, the logic has shifted from density to visibility. Towers are perceived as visible targets. Low-rise resorts, set back from urban centers and offering dispersed layouts, carry a perception of safety that no amount of marketing can replicate for a forty-story glass tower in a city center.
Which destinations benefit? Oman has long positioned itself as the quieter alternative to the skyscrapers of the UAE, and this may be the moment for Muscat and the mountain retreats of Jebel Akhdar to capture travelers. The ultra-luxury resorts of Saudi Arabia's Red Sea coast, deliberately designed as remote, exclusive, and off the beaten path, suddenly find that their isolation is an asset rather than a marketing challenge. Glamping and outdoor hospitality operations between Jeddah and Medina, originally targeting the domestic Riyadh staycation market, may discover a broader audience among regional travelers seeking refuge from urban anxiety.
Managing Non-Traditional Demand Segments
Government and military-adjacent bookings typically arrive as block reservations with specific security requirements, modified access protocols, and payment through institutional channels with 60-to-90-day settlement terms. Your finance team needs to manage the cash flow implications, and your operations team needs clear protocols for accommodating security details, vehicle staging, and communication equipment.
Humanitarian organizations and NGOs are price-sensitive but volume-reliable. They book extended stays, require meeting space, and often need flexible meal arrangements (early departures, boxed meals, communal dining). Negotiate extended-stay packages that guarantee occupancy floors in exchange for rate concessions. This demand is unglamorous but it pays the bills.
Media and press need reliable connectivity above all else. Ensure your IT infrastructure supports their requirements: high-speed wired internet in rooms, a dedicated work area with power and connectivity, and 24-hour food service, even if limited. Media organizations will pay premium rates for reliability and generate word of mouth among an influential global network.
Stranded Transit Passengers. Airspace closures can fill floors overnight. When regional disruptions ground transit passengers en masse, tourism authorities may issue block extension directives with government reimbursement. Treat this as a contractual relationship with a sovereign counterparty. Have a pre-approved protocol for allocating rooms and documenting reimbursement claims before the next disruption.
The Counter-Narrative: An Alternative Perspective on Risk
It is worth acknowledging a counter-narrative that is gaining traction on social media and among Gulf residents. A number of Dubai-based influencers and long-term residents are making the rounds with a perspective that goes roughly like this: yes, there have been distant drone incursions; yes, some have made it through the security apparatus. But the actual damage to property and human life within the Gulf states has been negligible. And, they argue, this makes the Gulf statistically safer than many American cities despite their levels of gun violence.
They are not gaslighting anyone. They are presenting a data point that has validity, particularly for travelers from non-Western markets. This conflict originates outside the Gulf; the GCC countries are bearing collateral damage from a war not of their making. For millions of people from nearby countries where security concerns and terror events are a routine part of life (parts of South Asia, East Africa, the Levant), the Gulf remains a comparatively peaceful alternative.
For hotel owners, the implication is a source market insight: do not write off all international demand. The traveler from Mumbai, Lagos, or Karachi does not share the risk perception of the traveler from London or New York. Markets that are accustomed to operating amid regional instability will return faster, and some may never have left. Your operator's sales team should be actively cultivating these markets right now.
Adnan Shamim
Managing Partner, Middle East & Africa
David Ordóñez
Hotel Asset Manager
QUESTIONS FOR YOUR NEXT OWNERS' MEETING
1. Is your property covering its marginal operating costs at current occupancy? If not, have you evaluated a structured temporary closure?
2. Have you consolidated to a single F&B outlet? Is that outlet good enough to drive local community traffic?
3. Are you maintaining (or even expanding) in-building services for guests who want to stay within the security envelope, or are you cutting them?
4. Does your property type (tower vs. low-rise vs. resort) carry a perception advantage or disadvantage in the current security climate?
5. Are you actively pursuing non-Western source markets where risk perception differs from European and American travelers?
The next article addresses the dimension of this crisis that keeps owners awake at night more than any balance sheet: their people.
