Hotels, among the first businesses hit by COVID-19, are still less than half full
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The pandemic economy has been particularly brutal for hotel chains
Earlier this week, Wyndham Hotels reported it lost $174 million in the second quarter — it made $26 million in profit the same time last year. Next week we’ll find out how Hyatt, Loews and Hilton have fared. Marriott reports the following week. The major hotel chains have laid off staff as bookings have tanked.
The hotel business was among the first to feel the pain, as travelers canceled trips and people stopped going out to eat, drink and get spa treatments — pretty much anything you can do at a nice hotel.
“We hit bottom in April, of about 20% occupancy levels, which is something that the industry’s never even come close to seeing before,” said Chip Rogers, president of the American Hotel and Lodging Association.
Rogers said that as states reopened their economies in May and June, bookings started to rise again. But then, COVID-19 cases surged and occupancy stalled.
“It has leveled off in the mid- to upper-40% [range] since that point, and we don’t seem to be moving any further,” Rogers said.
In the peak summer season, hotels are usually at least 80% full. Rogers said revenues are down, but hotels still need to pay their commercial real estate loans on time.
“We’re seeing a significant amount of delinquencies,” he said. “As we move into the fall, when people stop taking vacations, if there’s no significant increase in business activity, you’re going to see a lot of those hotels fall into foreclosure.”
Since the pandemic started, about 1 in 3 hotel workers have been laid off and not called back, said Nick Bunker at the Indeed Hiring Lab. And new job openings are few and far between.
“Job postings for hospitality and tourism are about 50% below last year,” Bunker said. “It’s still absolutely depressed.”
The industry is pressing for more financial help from Congress. The other hope for the travel industry is to get the pandemic under control.
Victoria Sakal at Morning Consult said that right now, with the recent spike in cases, “people of course are getting nervous about leaving their homes. And this can affect everything from going to a shopping mall, as well as bigger traditional discretionary activities like going on vacation.”
Sakal said consumers are less comfortable going out and spending now than they were back in June.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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