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COVID-19

Hotels continue to face fixed costs and low occupancy rates

Justin Ho Sep 29, 2020
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A tourist checks into a hotel in Savannah, Georgia, earlier this year. Chandan Khanna/AFP via Getty Images
COVID-19

Hotels continue to face fixed costs and low occupancy rates

Justin Ho Sep 29, 2020
Heard on:
A tourist checks into a hotel in Savannah, Georgia, earlier this year. Chandan Khanna/AFP via Getty Images
HTML EMBED:
COPY

The hotel industry has struggled since the outset of the pandemic and is still trying to survive with limited tourism and international travel.

There have been some signs of life in the hotel industry, said Lynn Mohrfeld, who runs the California Hotel & Lodging Association.

Mostly near outdoorsy areas in the state.

“Since air travel is not quite back yet, most people are jumping in their cars,” Mohrfeld said.

Hotels in urban areas have been struggling. The American Hotel & Lodging Association says occupancy rates in many cities are half of what they were last year or worse.

One reason? Mohrfeld says corporate conferences aren’t happening this fall.

“It’s going to be difficult to hold over across November, December, January, which are traditionally the slower months,” she said.

Hotels have high fixed costs. Owners often buy their properties and take out mortgages. Vijay Dandapani, president and CEO of the Hotel Association of New York City, said paying back that debt is tough now.

“When you don’t have money for such an extended period of time, you’re going to just lose the ability to remain solvent,” he said.

Dandapani said roughly 30% of hotels in New York City are likely to go out of business.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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