On March 23, a group of CREW members working in the hotel and hospitality sector gathered for a Virtual Conversation Corner to discuss the state of this industry amid the COVID-19 pandemic. June Ring, managing partner at Hudson Technology Partners, facilitated the group, which formed last September at the CREW Network Convention in Orlando, Florida.
With travel restrictions, stay-at-home orders, event cancellations and destinations shut down, resulting in massive furloughs and layoffs, hospitality is one of the hardest hit industries and may be one of the slowest to recover. Every day brings new issues and new information for the industry.
Below are a few of the topics the group discussed:
Status of Current Projects: Many projects are on hold, and some are still moving forward with their new construction. For those in the planning process, some clients are taking the project through the permitting process and then will re-examine market conditions.
Construction as Essential vs. Non-Essential Business: While rules differ by state, city and company, construction continues as an essential business in many states, and workers are still on site albeit following some new practices. [ConstructConnect put together this interactive map1 of essential vs non-essential construction states.]
Supply Chain Delays: Projects that are still moving forward may be experiencing delays in receiving materials from places including China. Specific examples cited as products that have been backlogged and may impact openings include lighting and curtainwall supplies.
Insurance Coverage: “The trigger for insurance coverage is direct physical damage to your property. As a result, overwhelmingly, the majority of policies are not being triggered by this event which is putting business owners at great peril going forward because they aren’t going to be able to collect damages for stopped work due to COVID-19 under policies that only cover property damages,” says Christine Chipurnoi, senior vice president at USI Insurance Services. Chipurnoi anticipates significant litigation over intent of policy.
- Re-Purposing: While hotels experience low vacancies or may have shut down or consolidated, there is a need for temporary housing of healthcare workers and first responders on the frontlines as well as quarantine healthcare beds. Hotel clients are getting inquiries for this type of re-purposing, which might help offset some of the vacancy.
No one can predict exactly how long it will take for this industry to recover, and the numbers are constantly being updated. That said, the American Hotel & Lodging Association2 estimates that more than one million hotel employees have or will lose their jobs, and almost 3.4 million hotel-supported jobs could be lost because of COVID-19.
For the week ending April 11, STR3 reported U.S. hotel occupancy at 21% and RevPAR (revenue per available room) decreased 83.6% ($15.61). The U.S. ADR or average daily rate was at $74.18. In Canada, occupancy was at 12%; ADR was at $101.34 Canadian dollars and RevPAR decreased 87.6% (CA$12.17).
Jan Freitag, senior vice president of lodging insights at STR, offers his opinion on “What US hotel recovery could look like after COVID-19” in this Hotel News Now article4. According to this article, STR’s “current U.S. revenue per available room forecast for 2020 stands at -50%, with a sharp rebound of +63% expected in 2021.”
In its report5 updated April 14, CBRE says it expects that activity will begin to stabilize in the third quarter of 2020, and “a recovery is expected to be underway by Q4.” Similar to STR, it expects US RevPAR to decline by 46%.
Some Good News
While the impact has been devastating, there are hospitality companies that are doing good, innovative things. These are just a few examples:
Care Packages: Forbes6 recently reported on how SBE Entertainment Group, which owns 28 hotels and over 200 restaurants, is using several of its locations as a fulfillment and distribution center to put together care packages for its 7,000 laid-off employees.
Job Resource Centers: Some companies like Hilton and IHG have launched job resource centers that give their team members “direct and, in some cases, expedited”7 access to hundreds of thousands of temporary jobs at companies like Amazon, Home Depot, Walmart, Walgreens, CVS and Dominos.
Hotels for Hope: Hotel Business reports that the American Hotel and Lodging Association has launched Hotels for Hope8 in an effort to connect hotel properties that may be able to assist healthcare workers and first responders with temporary housing.
- Rooms for Responders: According to Hotel Management9, “Marriott Bonvoy is launching Rooms for Responders in collaboration with its credit card partners, American Express and JPMorgan Chase, to provide up to $10 million in hotel stays and no cost rooms to front-line health-care workers in some of the hardest-hit cities in the United States.”
CREW members, watch this Virtual Conversation Corner recording and join the conversation in CREWbiz here.
1COVID-19 Construction Activity Report, ConstructConnect
2AH&LA Projects COVID-19’s State-by-State Jobs Impact by Chuck Dobrosielski, March 24, 2020
3STR: US Hotel Results For Week Ending 11 April, Hotel News Now, April 15, 2020
4What US Hotel Recovery Could Look Like After COVID-19 by Jan Freitag, Hotel News Now, April 8, 2020
5U.S. Hotel Viewpoint | An Updated 2020 Outlook by CBRE
6How SBE Founder Sam Nazarian is Supporting His 7,000 Laid-Off Hospitality Workers by Tanya Klich, Forbes, April 1, 2020
7Hilton Responds to COVID-19 Pandemic, Boutique Design, March 30, 2020 and IHG Launches Job Resource Center for Impacted Employees by Chuck Dobrosielski, Hotel Management, March 30, 2020
8AHLA, Others Offer Support During Crisis, Hotel Business, March 25, 2020
9Best Western, Marriott Launch COVID-19 Relief Efforts, Hotel Management, April 13, 2020
Michelle Yates is director of marketing for Lawrence Group, a 150-person design and project delivery firm headquartered in St. Louis with offices in Austin and New York. She leads the firm's marketing team and works with principals and market leaders to win new business in healthcare, higher education, hospitality, retail, senior living, multi-family housing and corporate workplaces. Yates, an SMPS Fellow, has 20+ years of marketing and communications experience with professional service firms and served as the 2019 CREW-St. Louis president.
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