Investopedia: U.S. Hotels in Survival Mode as Capacity Disappears
A new survey reveals most hotels can’t last another six months at these levels.
By Deborah D’Souza
September 22, 2020
Sixty-seven percent of U.S. hotel owners report they will only be able to last six more months at current projected revenue and occupancy levels without any more government relief. This statistic comes from a new survey by the American Hotel & Lodging Association (AHLA) conducted September 14-16 with more than 1,000 respondents.
The U.S. hotel industry occupancy was 48.6% in August, a record low for the month, according to STR. This of course means it gets harder to repay debts. Mortgage-backed securities market analyst Trepp said the percentage of hotel loans that are 30 or more days delinquent was 23.4% as of July 2020, up from 1.34% at the end of 2019.
Some more worrying figures from AHLA’s survey:
74% said they would be forced to lay off additional employees without further aid Half said that they are in danger of foreclosure by their commercial real estate debt lenders due to COVID-19
68% have less than half of their typical, pre-crisis staff working full time
“It’s time for Congress to put politics aside and prioritize the many businesses and employees in the hardest-hit industries. Hotels are cornerstones of the communities they serve, building strong local economies and supporting millions of jobs,” said Chip Rogers, president and CEO of AHLA. “These are real numbers, millions of jobs, and the livelihoods of people who have built their small business for decades, just withering away because Congress has done nothing.”
Publicly traded hotel companies have been feeling the strain, as well. Hilton, Hyatt and Marriott, which have both U.S. and international exposure have seen their stock prices tumble in 2020, as demand vanished. The lack of business travel has weighed heavily on their bottom lines, and all have been forced to lay off thousands of workers.
A separate study by PricewaterhouseCoopers said as of early September, approximately 61,450 hotel rooms (representing 58% of total inventory) in Manhattan were closed, with approximately 2,700 rooms reporting to stay closed permanently. Luxury hotels are disproportionately impacted. Vijay Dandapani, the president of the Hotel Association of New York City, told The New York Times that in late summer as few as 7% of the roughly 120,000 hotel rooms in the city were filled with traditional guests.