. The Latest on Hotel Reopenings and Closings Due to Covid-19 | Northstar Meetings Group

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

Marriott reported losses of $164 million in Q4 of 2020, while Hilton's revenue dropped $225 million. But overall occupancy rates rose slightly in January.

Hotels-Coronavirus-Hospitality-Healthcare-Workers

What States Are Open?
See which U.S. states are reopening or adjusting their Covid-19 restrictions by heading to our roundup of the latest updates of U.S. reopenings.

Updated Feb. 22, 2021.

The impact of the Covid-19 pandemic has been devastating for the hospitality industry. In the latest news, Hilton reported a net loss of $225 million for Q4 of 2020. Losses for the entire year topped $720 million. Meanwhile, Marriott's Q4 results showed a net loss of $164 million — a stark contrast to the net income of $279 million in Q4 of 2019. 

"With the global pandemic, 2020 was the most challenging year in our 93-year history," said Stephanie Linnartz, Marriott's group president of consumer operations, technology and emerging businesses. "In April, we experienced the sharpest worldwide RevPAR decline on record, down 90 percent year-over-year with just 12 percent occupancy ... While China has shown that demand can be quite resilient when the virus is perceived to be contained, we have also seen that progress can be slowed by significant spikes in virus cases, such as we saw in the U.S. and Europe towards the end of 2020." 

There are signs of recovery, however. As of Feb.10, Hilton had reopened 97 percent of its global hotel properties. Only about 220 hotels have temporarily suspended operations. The hospitality giant also debuted nearly 30,000 rooms in Q4 and approved an additional 18,700 for development.

Occupancy rates for the industry remain low, but ticked up slightly in January. According to hospitality data provider STR, overall occupancy stood at 38.3 percent in January, up from 36.7 percent in December. Destinations with the highest occupancy rates include Miami (54.5 percent) and Tampa (54.2 percent) in Florida, and Phoenix, Ariz. (49.3 percent). 
Oahu Island in Hawaii reported the lowest occupancy level for January, at 23.6 percent.

Still, hotel employment is unlikely to reach prepandemic levels until 2023, according to the American Hotel and Lodging Association's 2021 State of the Industry report. AHLA predicts that U.S. hotels will add 200,000 jobs in 2021, but will remain nearly 500,000 jobs below the industry’s pre-Covid-19 employment level of 2.3 million workers.

"Covid-19 has wiped out 10 years of hotel job growth," said Chip Rogers, president and CEO of AHLA. "Yet the hallmark of hospitality is endless optimism, and I am confident in the future of our industry. Despite the challenges facing the hotel industry, we are resilient. Hotels across the country are focused on creating an environment ready for guests when travel begins to return." 

How Vaccines Might Impact Recovery

Half of U.S. properties are projected to stay empty in 2021, as AHLA's research revealed only 34 percent of Americans feel comfortable staying in a hotel right now. Many respondents noted that their comfort level is tied to vaccinations, with 20 percent saying they won't feel comfortable staying in a hotel until a majority of Americans have been vaccinated. In addition, 17 percent said they would wait until they were personally vaccinated and 11 percent said they would feel comfortable when coronavirus vaccines are available to the general public.

In an effort to accelerate the industry's recovery, the AHLA is urging public officials to use hotels for vaccine distribution. In January, the association 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 inoculations. 

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 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."

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 eight 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, 908 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.

Where Properties Have Permanently Closed

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.

Economic Fallout and Job Losses

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. 

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."