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The Latest on Hotel Reopenings and Closings Due to Covid-19

2020 was the worst year on record for U.S. hotels, with a staggering one billion unsold room nights.

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Updated Jan. 21, 2020

The hospitality industry reported all-time lows in occupancy and revenue per available room for 2020, making it the worst year on record for U.S. hotels. According to new data from tourism analytics provider STR, the average occupancy rate was 44 percent, down 33 percent from the previous year. The average daily rate fell 21 percent to $103.25, while revenue per available room dropped nearly 48 percent to $45.48. 

In addition, the industry surpassed one billion unsold room nights for the first time in history. For comparison, there were 786 million unsold room nights during the Great Recession of 2009. 

In an effort to accelerate Covid-19 recovery, the American Hotel and Lodging Association is urging public officials to use hotels for vaccine distribution. On Jan. 14, the AHLA issued a letter to the Biden-Harris transition team, offering to mobilize its network of more than 50,000 properties across the U.S. for inoculation. 

According to the AHLA, hotels are well positioned to aid in the nation's vaccination efforts due to their infrastructure, including ample parking, large meeting spaces and access to major transportation networks. Low occupancy rates, enhanced Covid-19 cleaning protocols and refrigeration capabilities that allow for vaccine storage also make hotels an ideal option.

"Administering the vaccine on a national level will be a significant undertaking requiring innovative solutions and collaboration," said AHLA president and CEO Chip Rogers, in the letter. "To aide in the distribution, the hotel industry is asking that hotels be considered as an option for vaccine administration sites in partnership with public-health departments... The hotel industry is ready to step in and assist our community and alleviate the current burdens on our health systems in a time of national need."

The severe economic impact of the pandemic has forced many hotels to close. Among the most recent casualties is the Marriott Wardman Park in Washington, D.C., whose owner has permanently shut down the hotel and filed for bankruptcy on Jan. 11.

New York City is another destination that has been hard hit by the pandemic. According to a recent Manhattan Lodging Index from PricewaterhouseCoopers, more than half (58 percent) of Manhattan hotels remain closed. Findings from the report show approximately 61,450 hotel rooms in the city had not reopened as of early September. Of these, nearly 2,700 are expected to be shuttered permanently. 

"You won’t see meaningful increases in operating metrics for Manhattan hotels until we see a return of the business traveler, and that likely comes after a widely distributable vaccine and therapeutics become available," said Warren Marr, managing director of U.S. hospitality and leisure for PwC.

Among the properties that have already closed for good in New York are the Omni Berkshire PlaceTimes Square EditionHilton WestchesterW New York DowntownHilton Hotel Times Square, Courtyard by Marriott in Herald Square, AKA Wall Street and the Roosevelt Hotel. A report from The Wall Street Journal suggests 20 percent of the state's total hotel supply (about 250,000 rooms) could close permanently.

Recent aid from Congress, however, could help thousands of hotels stay open. The $900 billion stimulus deal, which was passed in late December, enables small businesses such as hotels to apply for a second loan. In addition, Biden's proposed "American Rescue Plan" calls for flexible grants to help the hardest-hit small businesses survive the pandemic.

Job Losses Continue

Research from Tourism Economics shows the leisure and hospitality industry accounted for 11 percent of pre-pandemic employment in the U.S., but makes up 36 percent of the nation's job losses as of September 2020. Recovery is expected to extend into 2023. 

As a result, many hotels — 87 percent, according to the AHLA — were forced to furlough or lay off staff members. Even as properties have reopened and occupancy picks up, layoffs continue. In many cases, furloughed employees are now losing their jobs permanently.

According to the AHLA, 68 percent of hotels have less than half of their normal staff working full time. In addition, more than two-thirds of hotels said they would not be able to last six more months at the current projected revenue and occupancy levels, and half of the hospitality owners polled said they are in danger of foreclosure.

In late November, Disney announced plans to lay off an additional 4,000 workers, bringing to the total number of employees expected to be let go by the first half of the new year up to 32,000. The company had previously announced in September that it would let go of 28,000 employees, about 67 percent of whom are part-time.  

"We initially hoped that this situation would be short-lived, and that we would recover quickly and return to normal. Seven months later, we find that has not been the case. And, as a result, we are now forced to reduce the size of our team across executive, salaried and hourly roles," said Josh D’Amaro, chairman of Disney parks, experiences and products, in a letter sent to employees on Sept. 29. "As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of Covid-19 on our business, including limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic."  

Marriott International let go of 17 percent of its corporate workforce in late October. The company had initially furloughed two-thirds of its corporate staff in March. In June, the furloughs were extended until early October. The hotel giant said it does not expect to return to prior levels of business until beyond 2021. Effective Sept. 20, Marriott is no longer listed on the Chicago Stock Exchange, a move the company said would reduce administrative costs and requirements.

Hotel and casino giant MGM Resorts also announced 18,000 of its furloughed staff would be laid off, starting Aug. 31. The company had furloughed 62,000 employees in March, according to Reuters. In June, Hilton let go of 22 percent of its corporate workforce.

InterContinental Hotels Group eliminated 10 percent of its corporate staff in July, as part of a $150 million cost-cutting plan that is expected to continue in 2021. Oyo Rooms, which operates more than 43,000 hotels with more than 1 million rooms around the world, announced in mid-July that more than 90 percent of its U.S. workforce would be let go. 

Las Vegas-based Boyd Gaming, which owns and operates 29 casino properties across 10 states, many with hotels, announced July 13 that it had let go more than 25 percent of its workers. The cut essentially turns a large number of furloughs into permanent layoffs. According to a company spokesperson, the number of layoffs is "at the lower end" of 25 to 60 percent of the total workforce — the range that the company had warned in May could be affected.

Doug Dreher, president and CEO of The Hotel Group, called the effect of the coronavirus pandemic on the hospitality industry "devastating" and expected his company to lay off at least a third of its workforce.

"It is for us the Great Depression, utterly devastating," said Dreher. "We've tried to get ahead of it. We're working with lenders, but we need help. We need help in every imaginable way. The human toll breaks your heart." 

Where Hotels Are Reopening

Many hotels are welcoming guests back with new cleaning protocols in place. Omni Hotels & Resorts, for example, has reopened most of its properties which had shut down during the pandemic. At the height of the crisis, the hotelier had temporarily closed more than 40 of its properties. Only nine have yet to reopen, according to Omni's travel advisory page.

Gaming resorts, which were among the first to suspend operations en masse, have also welcomed travelers back. A Covid-19 Casino Tracker from the American Gaming Association reports that all 989 casinos in the United States were forced to close due to the pandemic. Of these, 910 have since reopened.

MGM Resorts and Wynn Resorts, for example, suspended operations at their Las Vegas properties on March 16. The companies, along with other Nevada gaming powerhouses such as Caesars Entertainment and Las Vegas Sands, reopened select casinos on June 4 in accordance with the state's reopening plan. More Nevada properties are coming back online as demand rises, but new state restrictions in Nevada limit casinos to no more than 25 percent occupancy (see details here).

Park MGM and the NoMad Las Vegas were the last MGM properties to begin welcoming guests again, on Sept. 30. But in response to low occupancy rates, MGM has halted midweek operations at some of its properties. As of Nov. 9, the Park MGM hotel is closed from Mondays at noon through Thursdays at noon. The casino, pool and restaurants are still open during this time. MGM has also halted midweek operations at the Mirage and Mandalay Bay resorts. In similar news, Wynn Resorts has reduced operations at its Encore hotel to a four-day schedule, open Thursdays through Sunday. 

In Connecticut, two tribal casinos reopened on June 1. The Mohegan Sun and Foxwoods Resort Casino released detailed reopening plans with new safety protocols to keep guests and staff members safe. Atlantic City casinos reopened on July 2, and Massachusetts casinos also welcomed guests back in July. Plainridge Park was the first to reopen on July 8, followed by the Encore Boston Harbor on July 12 and MGM Springfield on July 13. Meanwhile, New York's Resorts World Casino and Jake's 58 Casino Hotel reopened on Sept. 9 and the Empire City Casino welcomed guests back on Sept. 21.

Despite a surge in new coronavirus cases in the state of Florida, Orlando's Walt Disney World began a phased reopening of its theme parks and resort hotels on July 11. Disneyland, in Anaheim, Calif., had announced a July 17 opening but has postponed that as the state has yet to release reopening guidelines for theme parks. A new date has not been set. The California theme park is currently serving as a vaccination site.

A Covid-19 hotel-status directory from EproDirect, a hospitality industry marketing agency, indicates whether more than 4,000 hotels are currently open, and if they are accepting individual reservations and group bookings. While most of the properties listed are in the United States, hotel reps from any destination worldwide can list their hotel's status for free.

International Insight

Looking to Asia, where the outbreak began, could provide further insight into the potential economic damage and timeline for recovery — although comparisons are challenging, as the United States has tallied far more Covid-19 cases and continues to do so even as stateside hotels open their doors. 

By mid-February, Hilton had closed all 150 hotels in China, totaling 33,000 rooms. At the time, the company said it expected a $25 million to $50 million hit on full-year adjusted EBIDTA, assuming the outbreak lasted three to six months with an equal recovery period. It wasn't until May 8, however, that the company resumed operations of all hotels in mainland China. The company is now looking to expand its presence in the country, and announced plans on June 23 to add 1,000 Home2 Suites properties to the market. 

"Asia pacific, led by China, is ahead in recovery because they went into the crisis earlier and have sort of gotten through not all of it, but most of the epicenter of the health crisis," said Hilton president and CEO Chris Nassetta during a session at Cvent's annual Connect conference in late August. "We hit a low point of 10 percent global occupancy in April. We have now sort of clawed our way back. We’re now running close to 50 percent occupancy around the world."

Meanwhile, Marriott has reopened 91 percent of its global hotels, including all 350 China properties. The hotelier's worldwide occupancy rates reached 34 percent in August, but occupancy rates in China are nearly double (60 percent). This marks a significant jump from earlier in the year. According to Sorenson, some of Marriott's China hotels were running at 7 percent occupancy in January, when the pandemic peaked there.

"China has been interesting to watch. We went into the crisis with about 350 operating hotels in China and about 90 to 100 closed and business disappeared in the beginning," said Sorenson during Cvent connect. "In the later part of January and into February, revenue was down about 90 percent across our hotels in China and occupancy was at 10 percent. We're now running about 60 percent occupancy as we speak and we think there is a real possibility that we will get back to 2019 levels of revenue as early as 2021. That bodes well and it does tell you something about the resiliency of people."

Occupancy levels for Hyatt hotels in Greater China reached 65 percent in July. According to president and CEO Mark Hoplamazian, the numbers show encouraging results that the hospitality industry can begin recovery now.