COVID-19: Industry fallout | Country restrictions grow

Late breaking news

Hilton closures: In the wake of the spread of novel coronavirus, Hilton Worldwide Holdings Inc. plans to close most of its hotels in major U.S. cities, Chief Executive Officer Christopher Nassetta said at a meeting with President Trump at the White House on Tuesday. Nassetta said occupancy rates could fall to 10% globally.

Read Bloomberg report

Marriott furloughs: Marriott International is poised to place tens of thousands of employees on furlough as a result of the coronavirus outbreak. “As travel restrictions and social distancing efforts around the world become more widespread, we are experiencing significant drops in demand at properties globally with an uncertain duration,” Marriott said in a statement. “We are adjusting global operations accordingly, which has meant either reduction in hours or a temporary leave for many of our associates at our properties.” Marriott said the furloughs will affect all types of workers. They won’t be paid their salaries during their time away from the company, but they will receive health care benefits.

Pebblebrook fallout: Pebblebrook Hotel Trust CEO and AHLA Board Chairman Jon Bortz said the REIT with 54 hotels and more than 13,000 rooms has let go over 4,000 employees. By the end of the month, he expects another 2,000 employees will also be let go, representing over three-quarters of Pebblebrook employees. Bortz added the company is looking at closing the doors at more than half of its properties.

More Vegas closures: Las Vegas Sands has announced that they will be closing The Venetian Resort Las Vegas, which includes The Palazzo and The Venetian Towers at 2 p.m. March 19 until at least April 1. Las Vegas Sands also said no layoffs or furloughs are being contemplated and the closure will not impact health care eligibility.

MGM benefit plan: MGM Resorts International which is closing all of its domestic properties by the end of Tuesday sent out a memo to employees Tuesday saying it will give two weeks pay, and extend health benefits for all part-time and full-time employees who are laid off. The health benefits will be extended until June 30 for employees enrolled in the MGM Resorts Health Plan. In addition, any employee laid off since March 9 will receive pay based on their average two weeks earnings. Tips and tokes will be included in some jobs.

Palm Beach icon closing: The Breakers, Palm Beach, Florida, will close at 4 p.m. Wednesday for at least three weeks in response to the threat of the coronavirus-related pandemic, the hotel has confirmed. The resort will also close its related businesses and restaurants. The hotel has an anticipated reopening at noon April 8, according to a statement released Tuesday.

Read Palm Beach Post report

USTA projection: US$809B hit

An analysis by the U.S. Travel Association projects that decreased travel due to coronavirus will inflict an US$809 billion total hit on the U.S. economy and eliminate 4.6 million travel-related American jobs this year. The study was prepared by Tourism Economics. Other details:

  • Total spending on travel in the U.S.— transportation, lodging, retail, attractions and restaurants — is projected to plunge by US$355 billion for the year, or 31%. That is more than six times the impact of 9/11.
  • The estimated losses by the travel industry alone are severe enough to push the U.S. into a protracted recession — expected to last at least three quarters, with Q2 2020 being the low point.
  • The projected 4.6 million travel-related jobs lost would, by themselves, nearly double the U.S. unemployment rate (3.5% to 6.3%).

Read the report 

Industry could take years to recover – Balazs

The economic fallout on the hospitality industry from the COVID-19 virus is so steep that it may take up to two years to recover, says the owner of luxury hotels such as The Mercer in Soho and the Chateau Marmont in Los Angeles. Andrew Balazs told Crain’s New York Business he expects most hotels in New York City may close within a month as a defensive measure to withstand the crisis, which would also mean cutting staff to save costs. The 75-room Mercer Hotel only has a few guests left, he added.

New York closed all restaurants, bars, cafes and nightclubs as of Tuesday. New York City’s comptroller estimated that hotel occupancy could fall an unprecedented 20%. In 2019, New York City’s average hotel occupancy rate was 86.2%.

Read more at Crain’s New York 

Moody’s: Global travel-related sector hardest hit

Moody’s Investor Service said the travel-related sector will feel the biggest economic effects from the virus, with passenger airlines, shipping and the lodging and leisure sectors among the hardest hit. How well companies can withstand the hit depends on how long the crisis lasts, with Moody’s saying that events are unfolding so quickly that their assessments will likely change over time.

STR: Dubai sees drop in occupancy, ADR

STR says the impact of the virus is weighing on Dubai hotel performance. According to its preliminary data, occupancy fell 9.4%, ADR dropped 14% and RevPAR fell 22.5% in February. The firm notes from February 1 to March 8 occupancy was down 28%, ADR fell 20% and RevPAR decreased 43% in year-over-year comparisons, with the sharpest declines coming in recent days. Dubai’s hotel industry was already seeing declines in the main metrics during the last two weeks of January.

STR: Melbourne hotels hit by event cancellation

Melbourne is also showing lower hotel performance levels for the same time period, with February occupancy down 11%, ADR falling 4.5% and RevPAR down 15%. Weekly data for the first week of March was worse, with occupancy down 12%, ADR sliding 9% and RevPAR down 20%. The firm notes the cancellation of the Cisco Live Melbourne event, which was to occur from March 3-6, affected year-over-year performance.

Vietnam stops issuing entry visas

Vietnam is no longer issuing new visas for foreign nationals and the government will quarantine visitors from countries including the U.S. as it fights the coronavirus, Reuters reported, citing state media on Tuesday. Vietnam said there were 61 infections from people visiting from overseas. This comes after 16 people who had the disease weeks ago had recovered.

Read Reuters’ story

Indonesia, Macau set restrictions

Indonesia’s government says as of March 20 it will suspend all most visa arrivals, including diplomatic and service visas, for one month, according to the Bali Hotels Association. Any foreign visitor to Indonesia will need to have a visa from an Indonesian representative outlining the purpose of the visit, with a health certificate issued by the health authority in each country. Macau, meanwhile, is enforcing entry restrictions on arrivals from all countries, except for traveling coming from the greater China region. The restrictions include a mandatory 14-day quarantine for all those traveling outside the greater China region.

Hotel rooms may become hospitals

Best Western Great Britain is considering turning its hotels into temporary hospitals to provide additional bed space to overtaxed hospitals dealing with the coronavirus. The brand says it expects to speak with its members this week about the plan, according to Forbes. The chain has 260 independently owned and managed hotels across England, Scotland and Wales; in total, it could could supply nearly 15,000 rooms. The hotel reported a significant increase in cancellations and a drop in bookings for March to July. Earlier in the month, Britain’s Department of Health block-booked a Holiday Inn hotel near London Heathrow Airport for a quarantine zone for suspected coronavirus carriers. 

Read Forbes’ story

Hotels to face cash crunch as restrictions mount

A looming recession, travel restrictions and restaurant closures because of the coronavirus are combining to hit the hospitality industry hard, and even well-capitalized owners will quickly use up cash reserves. Highly leveraged companies will be especially hard-hit, according to Bloomberg. Owners may close properties and lay off staff, but they still will need to service debt, pay property taxes and conduct basic building maintenance.

Read Bloomberg’s story

Other news

Wyndham signs New Zealand hotels: Wyndham Hotels & Resorts announced its launch of the La Quinta by Wyndham brand in southeast Asia with with the signing of two new hotels in New Zealand. The 87-room LQ by Wyndham Remarkables Park is set to open in late 2020 and the 246-room LQ by Wyndham Greenlane Auckland is slated to open in mid-2022.

Contributed by Debbie Carlson and HOTELS Editor Jeff Weinstein