Hotel Industry in Crisis

September 1, 2020

A new report on the state of the hotel industry 6 months into the pandemic finds that consumer travel remains at an all-time low, 40 percent of hotel employees remain unemployed and almost two thirds of hotels remain at or below 50 percent occupancy.

A just-released analysis of the state of the hotel industry by the American Hotel & Lodging Association (AHLA) shared a bleak view of the state of the hotel industry six months into the COVID-19 pandemic.

Hotels in major cities across the country are struggling to stay in business and the devastating job losses continue week after week. Just in the past week, more than 1,000 Detroit hotel and casino workers were laid off by MGM and Wynn, Loews and Marriott announced 1,900 layoffs at Central Florida properties (many at Universal Orlando) and the JW Marriott San Antonio Hill Country Resort & Spa announced it is laying off 462 workers—half its staff.

Not only are millions of employees furloughed or laid off, but travel demand is lagging far behind normal levels.

Here are a few key findings from the report:

Four out of 10 hotel employees are still not working.
Almost two-thirds (65 percent) of hotels remain at or below 50 percent occupancy—which is below the threshold at which most hotels can break even and pay debt.
Consumer travel remains at all-time low, with only 33 percent of Americans reporting they have traveled overnight for leisure or vacation since March and just 38 percent saying they are likely to travel by the end of the year.
Urban hotels are suffering the most and facing collapse with cripplingly low occupancies of 38 percent, significantly below the national average.

AHLA is one of several groups urging Congress to extend the Paycheck Protection Program, establish a commercial mortgage-backed securities market relief fund and make structural changes to the Main Street Lending Facility to ensure that hotel companies can access the program.

“Occupancy rates are nowhere near where they were a year ago,” said Chip Rogers, president and CEO of AHLA. “Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently.”