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
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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.

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