The American Hotel & Lodging Association has released an analysis on the economic and human struggle of the hotel industry six months into the COVID-19 pandemic, with millions of employees still furloughed or laid off and travel demand lagging far behind normal levels.
Chip Rogers, president and CEO of the AHLA, said the prolonged economic impact of the pandemic has taken an incredible toll on the hotel industry, with no sign of a recovery in sight. “While hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago,” he said. “Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently.”
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Key Findings
According to the analysis, almost four out of 10 hotel employees are still not working, compared to the national unemployment average of 10.2 percent. Additionally, only 37 percent of hotels have been able to bring back at least half of their full-time employees, while 36 percent have been unable to bring back any furloughed or laid-off staff.
Almost two-thirds (65 percent) of hotels remain at or below 50 percent occupancy, which is below the threshold at which most hotels can break even and pay debt.
Despite the improvements since the nadir of the downturn in the spring, consumer travel remains at an all-time low, with only 33 percent of Americans reporting they have traveled overnight for leisure or vacation since March and just 38 percent saying they are likely to travel by the end of the year. In contrast, about 70 percent of Americans take an annual vacation in normal times.
Urban hotels are suffering the most and are facing collapse with occupancies of 38 percent, significantly below the national average. Airport hotels, meanwhile, are reporting occupancies of 45 percent. Including hotels temporarily closed due to the pandemic, urban hotels’ room revenues were down 78 percent in July.
COVID-19 has left hotels in major cities across the country struggling to stay in business, resulting in massive job loss and dramatically reducing state and local tax revenue for 2020 and beyond. Since large urban hotels tend to employ more people than smaller properties in suburban or rural markets, the AHLA expects these properties to have a slower return to normal than their drive-to partners.
Seeking Support
“We are incredibly worried about the fall and what the drop in demand will mean for the industry and the millions of employees we have been unable to bring back,” Rogers said. “The job loss will be devastating to our industry, our communities, and the overall American economy. We need urgent, bipartisan action from Congress now.”
Hoteliers are urging Congress to move swiftly to help the industry through a targeted extension of the Paycheck Protection Program, establishing a commercial-mortgage-backed-securities market relief fund, and making structural changes to the Main Street Lending Facility to ensure hotel companies can access the program. “Our industry is in crisis. Thousands of hotels are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come,” Rogers said. “We need help urgently to keep hotels open so that our industry and our employees can survive and recover from this public health crisis.”