COVID-19: Airline bailout takes flight | US$5.8B deal on hold

Big bailout heading to airline industry

The Trump administration has reached an agreement in principle with major airline companies over the terms of a US$25 billion bailout in the midst of the coronavirus pandemic. The terms of the agreement had not been disclosed as of Tuesday. The Treasury Department said Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines would be participating in the payroll support program, which was created as part of the economic stabilization package passed by Congress last month. The funds are intended to be used to pay employees, and the airlines that take them are prohibited from major staffing or pay cuts through September.

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Mirae wants more time to close luxury hotel deal 

South Korea’s Mirae Asset Global Investments has asked Anbang Insurance Group for more time to close on its US$5.8 billion purchase of a U.S. luxury hotel portfolio as the COVID-19 pandemic disrupts financial markets. The two parties had been working toward finalizing a deal by the end of this week, but Mirae is now seeking an extension until the second half of this year because the required debt financing isn’t immediately available. Many bank loans and other forms of funding for hospitality transactions have ceased over uncertainty regarding how or when the global travel industry can recover.

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Virgin Hotels Las Vegas revamp on track

The makeover of the Hard Rock Hotel in Las Vegas, which closed in early February to transform into a Virgin-branded resort, is still on track despite the coronavirus pandemic. Last month, Nevada’s governor ordered casinos and other businesses closed to help contain the spreading coronavirus. But he let construction keep going, deeming it “essential” alongside hospitals, grocery stores and others amid the outbreak.

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Times Square hotel first to seek special CMBS loan

The Hotel at Times Square has applied for the first in what’s expected to be a wave of pandemic-battered CMBS (commercial mortgage-backed securities), according to CMBS market monitor Trepp. Borrowers for the 260-room boutique property “requested a 90-day forbearance due to the COVID-19.” The US$34.8 million loan matures in May 2023, and the borrowers of record are Wentworth Hotel LLC and Wented Realty Corp. A number of larger New York City hotels have been under debt strain even prior to the virus, largely due to over-leveraging while overproduction of new rooms was pushing down revenue.

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NYC Trump hotel lays off 70 workers

New York City’s Trump International Hotel and Tower had to temporarily lay off 70 of its workers after COVID-19 created “unforeseeable business circumstances” for the hotel and condo tower, according to records from the New York Department of Labor. The tower is one of many New York City hotels laying off employees as the coronavirus pandemic devastates the industry. Union leaders estimate that the pandemic could lead to 95% of the hotel industry’s workers losing their jobs.

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Singapore will certify hotels for cleanliness

Singapore has established the “SG Clean” designation, aimed at certifying hotels, attractions, and retail businesses so travelers have peace of mind when restrictions on travel and socializing finally lift. For hotels, that designation is based on a checklist of seven requirements, including having a process in place to check temperatures and recognize employees’ respiratory symptoms, increase the frequency of disinfection for common areas, and appoint an “SG Clean” manager. The Singapore Tourism Board wants to eventually certify thousands of tourism and lifestyle businesses.

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Accor providing mental health services for staff

Accor has prioritized the mental and physical well-being of its staff through a range of programs and apps that can be used at home. For instance, in Australia, Accor launched the Lifeworks Total Wellbeing App to provide all employees with 24-hour access to counseling sessions and well-being resources such as free webinars on “emotional wellbeing” and “talking to your children about COVID-19.” The company has launched similar programs in China, India and Thailand.

Forbes Travel Guide launches webinar series

Forbes Travel Guide created “Hospitality Strong,” a webinar series targeted at furloughed, laid-off and working hospitality staff of all levels, during the global coronavirus crisis. The Hospitality Strong eLearning Webinars will take place from April 23 to June 25. The complimentary webinars will be delivered by Forbes Travel Guide’s Learning and Development department and feature a mix of hospitality principles illustrated with stories and visuals. Topics range from “A Timeless Service Philosophy for Uncertain Times” to “Leading Through Luxury.” 

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U.S. hotel industry still seeing major declines

Reflecting the continued impact of the COVID-19 pandemic, the U.S. hotel industry reported significant year-over-year declines in the three key performance metrics during the week of April 5-11, according to data from STR. In comparison with the week of April 7-13 of last year, the industry recorded the following:

Occupancy: -69.8% to 21.0%

ADR: -45.6% to US$74.18

RevPAR: -83.6% to US$15.61

Aggregate data for the top 25 markets showed steeper declines across the metrics: occupancy (-75.1% to 19.6%), ADR (-51.7% to US$81.58) and RevPAR (-88.0% to US$16.01). Among those markets, Oahu Island, Hawaii, experienced the largest decrease in occupancy (-90.9%) and the only single-digit absolute occupancy level (7.1%). The drop in occupancy resulted in the steepest decline in RevPAR (-94.0% to US$10.26). San Francisco/San Mateo, California, posted the largest decrease in ADR (-62.5% to US$107.42).

Of note, occupancy in New York City was down 71.7% to 24.8%. In Seattle, occupancy dropped 70.9% to 20.2%. Each of those absolute occupancy levels were higher than the previous week, which is likely attributable to an influx of medical workers and first responders requiring lodging in those cities, STR data shows.

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Eric Waldburger dies: Waldburger, who served as president of the HK-based hospitality management company, Marco Polo Hotels (since renamed Wharf Hotels) from 2012 to 2016, passed away on April 10 in Japan. A highly respected hotelier, Waldburger also held leadership roles with iconic hotels, including Mandarin Oriental Macau, The Peninsula Hong Kong and The Ritz Carlton Hong Kong, as well as establishing Hutchison Whampoa’s Harbour Plaza hotel group. In lieu of flowers, his family is directing memorials to The Hong Kong Poly University’s School of Hotel & Tourism Management in the name of the Eric Waldburger Memorial Scholarship, which will support aspiring hoteliers along their lifelong journey of learning.

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