Only 37% of hotels have brought back half of their employees according to a survey by the American Hotel & Lodging Association (AHLA). Furthermore, 9 in 10 hotels have been forced to either lay off or furlough their employees due to COVID-19.
Businesses in the events and leisure sectors were hit the hardest as the pandemic unfolded. Since mid-February across the nation hotels have already lost more than $40 billion in room revenue. As of July 8, nearly 6 out of 10 hotel rooms were empty across the country.
Hotel Employees Still Out of Work
The result is 8 in 10 hotels had to lay off or furlough workers. And fewer than half of hotel employees are back to work due to the lowest ongoing occupancies the industry has ever seen. This is in addition to the thousands of hotels being shuttered completely.
Bringing Attention to the Industry
The survey conducted in late July reveals the toll COVID-19 has had on the industry. This comes at a time the US Congress is debating on a new round of COVID-19 recovery legislation. To bring attention to the crisis, the AHLA declared July 29 National Day of Action to Save Hotel Jobs. This is in part to highlight the need for a stimulus relief for the industry. With more than half of the hospitality sector in danger of foreclosure by commercial real estate lenders.
“We are encouraged to see many of AHLA’s industry priorities included in the Senate package released this week. We urge Congress to direct help to the industries and employees that need it the most, and to move swiftly to support them,” said Chip Rogers, president and CEO of the American Hotel & Lodging Association.
Hotel owners are already reporting they are facing massive, unavoidable layoffs and furloughs. AHLA says unless badly needed support comes to the industry the nation’s hotels cannot expect to fully recover before 2026.
Challenges Hotels are Facing
The unprecedented drop in hotel demand is threatening the survival of many within the industry. According to AHLA the hotel industry directly supports nearly 8.3 million total jobs. These include those directly involved in hotel operations, guest spending, indirect supply-chain and others. AHLA also fears declines in occupancy rates will lead to massive job losses for individuals across the industry.
According to the survey, 87% of hotels were forced to lay off or furlough staff because of COVID-19. With 36% of them unable to bring any of their furloughed or laid-off workers back to full-time employment. Of those who are teetering towards recovery, the situation remains grim. Only one in four hotels (24%) report being back to a minimum of 60% of their pre-COVID staffing levels. Meanwhile less than one in three (29%) are still at or below 20% staffing. Of the more than 600 hotel owner respondents, more than half say they are in danger of losing their property to foreclosure by commercial real estate lenders due to COVID-19
The survey canvased 1,200 respondents from more than 600 hotel owners to gage the impact of COVID-19.
What Support AHLA is Seeking
In its appeal, AHLA is calling for a slew of hotel-specific support from the federal government to keep hotels open. Among these include an extension of the Paycheck Protection Program (PPP) for severely impacted businesses. It also points to making structural changes to the Main Street Lending Facility established under the CARES Act to ensure hotels can access the program.
It is also advocating the establishment of a Commercial Mortgage-Backed Securities (CMBS) market relief fund, with a specific focus on the hotel industry. Additionally, it is calling for the inclusion of ‘limited liability language’ to provide a safe harbor from exposure to liability. This would apply to hotels that reopen and follow proper public health guidance
Furthermore, it is calling for tax reform to help hotels retain employees and restart travel. These it said should include tax credits for cleaning equipment and expenses and an Enhanced Employee Retention Credit (ERC) facility. Last but not least, it is calling for a temporary travel tax credit and restoring the entertainment business expense deduction. Because if people don’t go out or travel, it is all for naught.
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