The American Hotel & Lodging Association has launched The Forum, a series of conversations in which business and political leaders can discuss forces that will shape the hotel industry of tomorrow. This ongoing new series is an expansion of The Forum, an AHLA Experience, and will discuss critical issues for the hospitality industry.
For the first of these virtual conversations, AHLA President Chip Rogers interviewed Maryland Gov. Larry Hogan (chair of the National Governors Association) and Arne Sorenson, president and CEO of Marriott International, discussing the long-term effects of the COVID-19 pandemic on businesses and local governments.
The Government Perspective
“None of us have ever been through anything like this before,” Hogan said of the current crisis. To navigate the uncertain waters and determine next steps, Hogan has been working with public health experts and business leaders like Sorenson, whose company is based in Bethesda, Md. “We've been trying to get the best information available about making these decisions that try to [keep] our economy going ... while making sure that we do not have the situation that's happening now in some states across the country, where you move too quickly, and we have this virus get back out of control,” Hogan said. “That's the last thing we want to have happen, and that can be even more devastating and catastrophic to our economy.”
With input from medical professionals and business leaders in mind, the state government put together a “very careful, phased plan that was gradual and safe and effective,” Hogan said. Positive COVID-19 cases are down across the state, he added, as are hospitalizations and death rates. Still, he cautioned, the threat is not over yet. “People are getting to the point where it's just back to normal, and they're not doing the things that they've been doing for the past several months,” he said. “And that's our biggest concern, really. It's what we're seeing in a number of states.” Some jurisdictions, he noted, are requiring mandatory masking or closing businesses that had reopened—and are still faced with overwhelmed hospitals: “We do not want to see that happen in our state, or another state, so we've got to really continue to be cautious.”
Since the virus first appeared, the response from the medical, governmental and business communities has shifted as new information has become available. “We're making decisions at Marriott [and] across the industry which are, by definition, in a grayer area and that have to be made faster than you could do the kind of research you would typically do,” Sorenson said. Marriott furloughed about 70 percent of its headquarters staff within a few weeks of the virus hitting the U.S. “We have never made a decision like that before, and we made it in a context of monumental uncertainty about how long this crisis would last,” he said. Speed and ambiguity, he added, are the two conditions the industry is confronting today that are “quite different from what would be the case in normal times.”
Hogan agreed that these two factors make recovery challenging: “We're making decisions based on how [to] save people's lives while not ruining the economy, and it's a very delicate balancing act.”
Sorenson said he wants to work alongside franchisees to make sure the full Marriott community is prepared to “make the decisions that we need to make so that we can protect our people, protect our guests, protect our franchisees and protect our company, so that all of them are in a position to come through the other side of this crisis as strongly as they can.”
Maryland, Hogan said, has half a million people unemployed. “We're trying to get all those folks back to work,” he said, noting that the state’s unemployment rate is at 9 percent—“which is more than a third better than the rest of the country.”
While those rapid decisions can have far-reaching consequences, clear lines of communication can help make them easier. Over the past 100 days, Hogan said, he has led 36 Zoom calls of the Governors Association, 24 of which included the president, the vice president, the cabinet and the [Maryland] Coronavirus Recovery Team. “That's in 100 days,” he said. “I don't think we've ever had a single call the other five years that I was governor. So the communication has been great.”
Across the region, he said, governors and leaders have maintained communication, sharing best practices and ideas or just checking in with one another. “Communication and sharing of information is critically important when things are happening so quickly and you need to make decisions,” he said. “You want to get all the best input and be as open and transparent as you can on the communication.”
Back to Normal
As states reopen, hotels may face other challenges in getting back to normal. “All these small businesses, including hotels that have furloughed or laid off their team—many of them will want to go back to those teams and bring them right back, whether [or not] they're all available to come back,” Hogan said. “Are they still in the same location? Are they someplace else? Have they taken different work, because there are parts of the economy that are stronger? Just to work through that bit is going to be complicated.”
Still, he said, demand is there as evidenced by the (slowly) improving occupancy numbers. “We may or may not be traveling for work, we may not be getting back to the big conventions yet,” he said. But travel to open areas with natural attractions like beaches and mountains—where a virus would be less concentrated—is on the rise, and hotels in those areas may lead the way in industry recovery. Still, he cautioned, it may take years before hotels see revenue per available room levels like they saw in 2019. “We're really likely to require the kind of confidence in the safety of travel, which really can only be had when the sense of COVID-19 is that it is behind us,” he said.