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It’s no secret that the travel industry has been hit extremely hard over the past few weeks. We have seen airlines slash their traffic by 40% or more in some cases and airline groups are requesting unprecedented bailouts.
But the hotel industry has also been hit extremely hard.
It’s estimated that half of the hotels in the US could close due to the ongoing pandemic, according to Chip Rogers, president and CEO of the American Hotel & Lodging Association.
Occupancy in hotels is falling down rapidly.
In fact, occupancy levels are hovering around 50%. But in some harder hit cities like Seattle and San Francisco, occupancy levels have fallen below 20%.
In order to stay afloat, many hotels are keeping on skeleton crews but if the occupancy rates dip below 30%, they may be forced to actually close their doors.
Marriott may be putting tens of thousands of employees on furlough and other major hotel companies like Hilton have temporarily suspended operations at some of their high profile properties like the Capital Hilton in Washington, D.C, and the New York Hilton Midtown.
So occupancy levels are very low and properties will likely be shut down at least temporarily but how bad are things really in the hotel industry?
Well, travel industry leaders met with the President and Vice President this week and reportedly stated that the impact from the ongoing pandemic is possibly two or three times as bad as the effect of 9/11 and the financial crisis combined.
And since that meeting, occupancy rates have continue to trend downward.
Also an Oxford Economics study predicted 2.8 to 3.4 million jobs in the hotel industry may be lost. Compare that to the the 400,000 lost from the 2001 crash and 9/11 and the 470,000 lost in the 2007 to 2008 recession
That is a massive disparity.
So that tells you just how bad things are — worse than 9/11 and the financial crisis. Combined.
Keep in mind that economic production is directly tied to the health of hotels in a lot of ways. Hotels are meeting places were huge deals are made and conventions are held. They facilitate commerce in many different ways and on many different levels.
As a result of this huge down turn, the hotel industry is now seeking a massive bail out of $250 billion in bailouts for owners, employees, and suppliers.
The bailout would be put to use in the following ways: $150 billion for hotel owners to make loan payments and to support employees who are being laid off and $100 billion for suppliers.
H/T: USA Today
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.