Travel’s weak rebound since the economic shutdown began to ease has left the hotel industry “on the brink of collapse,” the American Hotel & Lodging Association (AHLA) has warned.
The numbers are grim:
- Just 33 percent of Americans report having traveled overnight for pleasure since March and only 38 percent are likely to do so by the end of the year, marking an all-time low in non-business travel.
- Only 25 percent plan to travel for Thanksgiving and 29% for Christmas.
- 14 percent of hotel rooms were booked for the Labor Day weekend, compared to 41 percent in 2019.
- Nationally, the hotel vacancy rate is 50 percent, with occupancy at 38 percent in cities and 45 percent in hotels near airports. About 65 percent of hotels are operating below 50-percent occupancy, the typical rate at which an inn can break even.
- Four out of ten hotel employees are still furloughed, leaving more than four million people jobless.
“Jobs at urban hotels are unlikely to return without either a dramatic increase in occupancy – which is unlikely – or additional Congressional action,” the AHLA said in a statement.
The latest casualties are Hilton’s 44-story Times Square hotel, which is closing for an indefinite period and laying off 200 workers, and Ashford Hospitality’s Embassy Suites hotel in midtown New York City; Ashford recently surrendered the property to its mortgage holder.
More than a third of New York City hotels are delinquent on their mortgages.
Fourteen New York City inns with mortgages bundled into commercial mortgage-backed securities are at least 60 days late in their payments, according to Trepp, a real estate analysis firm. A Holiday Inn in the financial district and the Tryp hotel near Times Square South already have defaulted.
In 2019, New York added 6,131 hotel rooms after building 3,696 in 2018, according to data firm Smith Travel Research, leaving the market overbuilt before the economy shut down.
A growing number of hotels in Houston, Chicago, and Los Angeles are also delinquent on mortgage payments, Trepp reported.
TREND FORECAST: As long as COVID Fear reigns, the hospitality, restaurant, entertainment, amusement, brick and mortar retail, and tourism sectors will continue steep declines. With most citizens of the world ready to get a COVID vaccination when it hits the market, when fear levels recede and masks are taken off, these sectors will moderately rebound.