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The travel industry is diving head first into an existential crisis. After airlines, hotels are now facing the brunt. With public meetings effectively canceled, hotels are already running empty. Social distancing is the new normal. In essence, hotels are now also facing the consequences of Covid19 as they brace for closures.
Hotels face Closures
Seeing a lack of demand, many hotels are already facing temporary closures. The 400+ room W Hotel in San Francisco is closing temporarily due to lack of demand.
The American Hotel and Lodging Association put out a statement about the drop in demand, as reported by SF gate.
In certain affected markets, including Seattle, San Francisco, Austin and Boston, hotel occupancy rates are already down below 20 percent and individual hotels and major operators have already shut down operations.
The hotel industry estimates that close to one million hotel industry jobs could disappear in the upcoming weeks.
On expected lines, airlines have already approached government in order to seek aid to save the airline industry. This report by CNBC delves into the financial woes of the hotel industry. Given the magnitude of this crisis, it does seem like things will only get worse before they get any better.
- Revenue per room (known as RevPar) has fallen by almost 33% to $64
- For the week of March 8-14, hotel occupancy rate plummeted by a massive 24% to 53% YoY
- AirBnB booking for the week of March 1-7 fell by 41% for Rome and 96% for Beijing
Given this scenario, the CEOs of Hilton, Hyatt and Marriott met President Donald Trump on Tuesday. Lobby groups representing the hotel industry also accompanied them. Doug Dreher, CEO & President of The Hotel Group, described the situation in these words.
“It is, for us, the Great Depression. Utterly devastating, We need help in every imaginable way.”
Marriott, which is the biggest player in the business, is already making cuts. CNN Business reports about the plight of the industry and its workers as it stands today.
All levels of Marriott employees could be furloughed, from housekeepers to general managers. There won’t be job cuts on the corporate level yet.
The Pundit’s Mantra
The travel industry is clearly suffering. It almost seems unbelievable that everything was going on smoothly when the year started. On one hand, people are concerned that almost all service industry workers who won’t be able to work and need help to feed their families.
On the other hand, people are skeptical about the power of industry and lobbying groups in getting tax payer funded assistance from the government. As the average person locks down and foregoes pay, these discussions are bound to play out in the public sphere in a polarizing way.
As elections loom large, one can expect a few fireworks and brinksmanship before real action is taken. Also, billionaire entrepreneur Mark Cuban has already opined that companies that get bailed out should be barred from buying back their stocks in the future.
What do you think about airlines, hotels and their lobbying group approaching government for aid? Tell us in the comments section.
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