. 4 Million Hospitality Jobs at Risk Due to COVID-19; States Ban Leisure Hotel Bookings | Northstar Meetings Group

4 Million Hospitality Jobs at Risk Due to COVID-19; States Ban Leisure Hotel Bookings

Hotel executives say the impact already has been devastating and that relief is required to keep businesses afloat.

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Coronavirus and Meetings
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Updated April 6, 2020, at 9:45 a.m. EDT 

Latest: The Trump Organization has laid off 1,500 employees across the U.S. and Canada due to COVID-19. According to The Washington Post, hotel employees in New York, D.C., Miami, Chicago, Las Vegas, Honolulu and Vancouver have been laid off or furloughed. Several properties, including Trump National Doral Miami, Trump International Hotel Las Vegas and Trump International Hotel Waikiki, have temporarily closed. Others remain open with limited staff and services. 

Some states are taking action to keep travelers out of hotels in an effort to prevent the spread of coronavirus. Massachusetts has banned hotel and short-term rental bookings for leisure purposes. Governor Charlie Baker said the rooms should only be used for emergency purposes, such as housing front-line healthcare workers. Connecticut has also issued a temporary ban on hotel room bookings for tourists, and Maine has ordered all hotels and lodging operations to shut down. In Florida, similar measures have been taken in Brevard County, Jacksonville and Fort Myers Beach. 

First, it was the attractions. Then, bars and restaurants began to close. Now, a growing number of hotels are shutting down as confirmed coronavirus cases -- as well as calls for social distancing -- sweep the country.

The economic impact is already staggering, with occupancy rates dropping into the single digits for some properties. According to the American Hotel and Lodging Association, nearly 4 million jobs are expected to be lost in the hospitality industry and U.S. hotels are on track to lose more than $200 million in room revenue per day due to COVID-19.

"From major cities to mainstream USA, our 33,000 hotels across the country are facing the difficult decision right now over whether to close their doors and lay off millions of people over the next few days. Not weeks, not months, but days," said Chip Rogers, president and CEO of the AHLA, in a press briefing in mid-March. "Many have in fact already closed."

Major Layoffs and Wage Reductions

As occupancy rates fall, hotels across the country have begun reducing their workforces. Marriott International, the world's largest hotel company with 1.4 million rooms, has begun furloughing employees at all levels. The company, which had nearly 174,000 employees at the end of 2019, expects to place tens of thousands of them on furlough, according to the Wall Street Journal. Workers will not be paid during this time, but will continue to receive health benefits.

In a video update on March 19, Marriott president and CEO Arne Sorenson shared additional details, including that the company has paused almost all new hires, stopped all hotel initiatives for 2020 and suspended all marketing efforts. Sorenson and executive chairman Bill Marriott Jr. will receive no pay for the year and the Marriott executive team will take a 50 percent pay cut. 

"As a leader, I have experienced so many wonderful highs and a good number of challenging lows," said Sorenson. "I can tell you that I've never had a more difficult moment than this one. There is simply nothing worse than telling highly valued associates, people who are at the heart of this company, that their roles are being impacted by events completely outside of their control."

Other hoteliers are also feeling effects of COVID-19, including Pebblebrook Hotel Trust. The company, which represents 54 hotels and 13,000 rooms, has already had to lay off half of its employees (4,000 of 8,000). Jon Bortz, Pebblebrook CEO and AHLA chairman, said it will likely let go of another 2,000 by the end of the month. 

Doug Dreher, president and CEO of The Hotel Group, called the effect of coronavirus on the hospitality industry "devastating" and said he expects his company will have to lay off 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."

Hotel giant Accor has reduced the schedules of or furloughed 75 percent of its global head office teams. By early April, the company has closed more than half of its 5,000 hotels and said it expects more than two-thirds of its properties will be closed in the coming weeks.

Aimbridge Hospitality, a global third-party hotel management company, announced wage reductions at the corporate level and other cost contentment initiatives to reduce the impact of COVID-19 on business. The company has also launched Aimbridge Aid, a non-profit designed to provide financial aid to Aimbridge employees who have been impacted by the crisis. 

In addition, Aimbridge Hospitality has appointed Erica Hageman, former executive vice president and general counsel for Interstate Hotels & Resorts, as its new chief government affairs officer. Hageman will keep hotel owners updated on company policies and government legislation, as well as advocate for the hospitality industry.

Shuttered Properties 

Gaming resorts have been the first to suspend operations en masse, many in response to local mandates. Massachusetts was one of the first to do so: The Gaming Commission ordered the state's three casinos to close, including the Encore Boston HarborMGM Springfield and Plainridge Park Casino. Those properties closed March 15 at 6 a.m. The situation there will be reevaluated in two weeks. 

The nine casinos in Atlantic City, N.J., as well as all gaming properties in New York and Connecticut, closed Monday night in response to a mandate from state officials. Similar local restrictions have caused gaming-resort closures in Pennsylvania, Maryland, Indiana, Ohio, Michigan and California, among other locations. Boyd Gaming Corporation has closed four casinos in conjunction with official state guidance, including the Belterra Casino Resort and Blue Chip Casino Hotel and Spa in Indiana; Belterra Park in Ohio; Par-A-Dice Casino Hotel in Illinois; and Valley Forge Casino Resort in Pennsylvania.

MGM Resorts and Wynn Resorts both have decided to suspend operations at their Las Vegas properties as well. MGM is doing so until further notice. Casinos closed March 16, followed by hotel operations on March 17.

"It is now apparent that this is a public health crisis that requires major collective action if we are to slow its progression," said Jim Murren, chairman and CEO of MGM Resorts, in a statement. "Accordingly, we will close all of our Las Vegas properties as of Tuesday, March 17th, for the good of our employees, guests and communities. This is a time of uncertainty across our country and the globe and we must all do our part to curtail the spread of this virus. We will plan to reopen our resorts as soon as it is safe to do so, and we will continue to support our employees, guests and communities in every way that we can during this period of closure."

Wynn Resorts temporarily closed its two Las Vegas properties, effective March 17 at 6 p.m. The Wynn Las Vegas and Encore hotels are expected to remain closed for two weeks, after which time the company will evaluate the situation. A limited number of employees and management will remain on site.

Wynn has committed to paying all full-time employees during the closure and instituted paid sick days last week for any workers who may need to be quarantined.

"In the news, we read of families painfully affected by the coronavirus, and so we quickly instituted paid sick days for any employees that may require physician-mandated quarantine," said Wynn Resorts CEO Matt Maddox in a statement on March 12. "Every scientific and health authority I’ve spoken to has focused on the need for social distancing, which is to say, creating sufficient space between each of us to impede the spread of the coronavirus. This isn’t simply a good idea; it is essential, and not forever, but certainly for now." 

On March 25, Ryman Hospitality Properties announced plans to temporarily suspend operations at its five Gaylord hotels. This includes the Gaylord Opryland Resort & Convention Center in Nashville; the Gaylord Palms Resort & Convention Center in Kissimmee, Fla; the Gaylord Texan Resort & Convention Center in Grapevine, Texas; the Gaylord National Resort & Convention Center in National Harbor, Md; and the Gaylord Rockies Resort & Convention Center in Aurora, Colo.

Disney has closed its theme parks in California and Florida until further notice. The company has also suspended hotel operations and announced it will begin furloughing employees on April 19. Executive chairman Bob Iger will forgo his salary and CEO Bob Chapek will take a 50 percent pay cut to offset losses from coronavirus. Other Disney executives will also take pay cuts.

Omni Hotels & Resorts has temporarily closed nearly 40 properties. The Omni Nashville Hotel and Omni Austin Hotel Downtown are among the most recent additions to the list. As of now, the company said it plans to resume operations on Friday, May 15.

Delayed Openings and Renovations

The pandemic is also affecting properties in the pipeline. The grand opening of Universal's Endless Summer Resort – Dockside Inn and Suites has been postponed. The resort was scheduled to open in mid-March; a new date has not yet been announced. 

Marriott is also expecting to open and sign fewer hotel deals in 2020 than anticipated. In addition, the company has temporarily deferred most brand standards to help owners and franchisees, including delaying renovations due in 2020 by one year, according to Sorenson. 

"The coronavirus is fast becoming the most significant event to ever impact our business; that includes the 12-month period after 9/11 and the financial crisis of 2009," said Sorenson during an investor update on March 19. But he noted that the development pipeline has not ground to a complete halt. "We’ve been signing deals and we have development committees that are meeting monthly. The volume is lighter and the numbers will be lower than we anticipated but they won’t be zero."

Insight from Abroad

Looking to Asia, where the outbreak began and is now subsiding, could provide further insight into the potential economic damage and timeline for recovery — although preliminary estimates indicate the toll could be much greater across the United States. By mid-February, Hilton closed roughly 150 hotels in China, totaling 33,000 rooms. 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. 

Similarly, Disney was forced to shutter its Shanghai and Hong Kong theme parks in late January, a move that was expected to cost the company as much as $175 million. Shanghai Disneyland remains closed, but a phased reopening of some facilities has begun. The Shanghai Disney Resort resumed partial operations on March 9, with the opening of Shanghai Disneyland Hotel and limited shopping, dining and recreational experiences. All guests entering the Shanghai Disney Resort must undergo temperature screening procedures upon arrival, present their Health QR Code when entering dining venues and wear a mask during their entire visit. A reopening date for Hong Kong Disneyland has not been announced. 

Marriott, meanwhile, is starting to see reopen its hotels in China.

"So far in March, as workers return to their jobs and regional travel resumes, albeit slowly, occupancy rates in China are beginning to rise," said Sorenson. "We’ve gone from over 90 hotels in Greater China closed at the height of the outbreak to under 30 closed today. It is encouraging to see the trend lines in China and the Pacific region starting to improve."

A Call for Government Assistance

To help contain the virus and get businesses back to normal, hotel industry leaders are seeking federal aid. Top executives from Hilton, Marriott, MGM Resorts, Disney and more met with President Donald Trump, Vice President Michael Pence and Secretary of Commerce Wilbur Ross, Jr. on March 17 to plead their case and request $150 billion in aid.

"We're moving towards the kind of occupancy levels that we all heard about in China," cautioned Jon Bortz of Pebblebrook. "This is a health crisis, so the need is immediate. Folks are being furloughed and laid off every day. Hotels are suspending operations and it will take time to restart operations when we have a recovery."