The COVID-19 coronavirus outbreak has officially been declared a global pandemic by the World Health Organization, with more than 118,000 confirmed cases in 114 countries, areas and territories so far, and 4,292 deaths. The U.S. reportedly has more than 1,000 cases with at least 30 deaths.
One day after sharing a press release signed with 149 other travel-related organizations that said “it's OK to live, work, play and travel in the U.S.,” the American Hotel & Lodging Association held a press conference to update the industry on its efforts.
“We are in daily contact with public health authorities and are acting on the most up-to-date information on the evolving coronavirus situation,” AH&LA President/CEO Chip Rogers said, emphasizing that while there currently are no restrictions to travel within the United States, the industry is “taking very seriously” the concerns of America's traveling public. “It's critically important to remain vigilant and take useful precautions at times like these,” Rogers said, “and it's equally important to make calm, rational and fact-based decisions.”
While acknowledging that at-risk groups, older individuals and those with underlying health conditions should take extra precautions, Rogers said the “overall coronavirus risk” in the U.S. remains low. “Our industry hotels have protocols in place to deal with everything from the common cold to the flu,” he said. Beyond the normal cleaning procedures hotels have had in place for years, he said properties are increasing the frequency of guestroom cleanings, increasing the alcohol content in cleaning materials to a minimum of 60 percent alcohol, making sure all laundry reaches 120 degrees Fahrenheit and installing hand sanitizer stations.
At the same time, Rogers said the association is “concerned about the steady pace of cancellations of conferences and meetings” and the impact these cancellations have had on hotel employees and small-business owners. “Let me be very clear: Those who are currently being impacted are, in fact, the mom-and-pop small business hotel owners,” he said. “Sixty-one percent of the hotels in the United States are small businesses who will face difficult decisions should these cancellations continue. That's why we are having critical conversations with the White House and Congress.”
Handling the Financials
The AH&LA’s EVP of government affairs, Brian Crawford, said the association is predicting a loss of 4.5 points in occupancy and a 15 percent decline in revenue—and this is the best-case scenario. “And at this point, many of our small-business owners are projected to be operating in a negative cash flow position in terms of their expenses and debt,” he added. If the situation continues, owners will be unable to fund their operating expenses, including paying for their workforce (including benefits) and ensuring their debt service payments to their lenders. “In reality, we're likely to see revenue declines at a much greater percentage in many markets,” Crawford said. “Already, many of our members are facing difficult decisions as they see significant decline in bookings, as well as a steady clip of cancellations of their meetings and event businesses.”
In major cities like Seattle and San Francisco, he said, many hotels operate at 80 to 100 percent occupancy from Monday through Thursday: “This week and next week, they're looking at 20 or below 20 percent occupancy.” Boston and Austin, Texas, are seeing significant declines that are more severe than the general baseline.
Some industry analysts have calculated that the industry is losing up to $100 million per day in room revenue alone, Crawford added, and this does not account for additional revenue generated through meetings and events or food and beverage. The impact will be felt downstream as well, Crawford cautioned: “Guests spend $550 billion in hotels and communities while they're traveling, from restaurant to retail,” he said.
With these numbers in mind, AH&LA leadership has been meeting with both the administration and with leadership in Congress about the impact to the industry and the need to support employees and employers during the crisis.
“What we're asking for is simple,” Crawford said. “The administration can take immediate steps to help small-business owners and their employees by ensuring access to capital, liquidity and increased credit markets.”
If small-business owners are to continue to pay their employees during this “difficult patch,” he added, “access to capital and liquidity is going to be incredibly important.” The AH&LA also is asking the Treasury Department to work with banks on debt forbearance and flexibility around loan options, and working with leaders on Capitol Hill to talk through what a potential economic stimulus package could look like that will benefit both employees and employers.
For an idea of what this package might look like, the association is looking to previous packages that were passed after 9/11, Hurricane Katrina and the Gulf oil spill—all “tried and true” deals, Crawford said. “These are things that Congress has already agreed upon. There's a voting record and a precedent for these types of provisions. And there’s a menu of options available to Congress. Right now, they're trying to determine which of these options would be best for this specific scenario.”
Rogers expressed hope that if decision-makers from every level—“from public companies to private companies to elected officials”—will make decisions based on health guidelines from the Centers for Disease Control and Prevention, the industry will move past the crisis “a lot more quickly than if we are making decisions based solely out of fear—which, unfortunately, has led us to where we are today.”
But Rogers expressed frustration with businesses that are curtailing travel for employees, but noted that many companies are following guidelines from the CDC that recommend exercising caution—not a cessation of travel. “This is one of, perhaps, the frustrating parts—that in many ways, this is a self-inflicted wound to our industry, not from people in the industry, but those who travel, for not following the CDC guidelines from the experts who say that the risk remains low, that travel is safe,” he said. “There are precautions that people need to take, there's no question about it, but if you take those precautions then travel will continue to be safe. So it's really unfortunate that a lot of people are making decisions that are not based on facts. But if we want to avoid, perhaps the catastrophic numbers that were mentioned earlier, the single best way to do that is for people to begin looking at ... the facts [and] the actual risks, and making decisions based on those facts and risks.”