Hotel CEOs met yesterday with U.S. President Donald Trump and Vice President Mike Pence to discuss economic recovery solutions amid the coronavirus crisis and the rapid cancellations in travel that it is triggering.
Pebblebrook Hotel Trust, a REIT with 54 hotels with over 13,000 rooms and over 8,000 employees in the U.S., has let go more than 4,000 employees, its CEO, Jon Bortz, said after the meeting. “By the end of the month, we expect another 2,000 employees will also be let go, representing over three quarters of our employees. We are looking at closing the doors at more than half of our properties. This is the reality we, and countless other owners and operators around the country are facing in the wake of this public health situation.”
According to the American Hotel & Lodging Association (AHLA), 4 million total jobs in the U.S. have been eliminated or will be lost in the next few weeks, and 1 in 25 jobs are directly supported by the hotel industry. Marketings including Seattle, San Francisco, Austin and Boston are seeing occupancy rates below 20%, and individual hotels and major operators have already shut down operations.
“The impact to our industry is already more severe than anything we’ve seen before, including September 11th and the great recession of 2008 combined,” Chip Rogers, AHLA president and CEO said in a statement after the meeting. “The White House and Congress can take urgent action to protect countless jobs, provide relief to our dedicated and hardworking employees, and ensure that our small business operators and franchise owners – who represent more than half of hotels in the country – can keep their doors open.”
According to a study by Oxford Economics, a 30% decline in hotel guest occupancy could result in the loss of nearly 4 million jobs, with US$180 billion of wages and a US$300 billion hit to the GDP.
During the meeting, CEOs – from companies including Best Western, Choice Hotels International, Hilton, Hyatt Hotels Corp., IHG, Marriott International, MGM Resorts, Pebblebrook, Universal and The Walt Disney Company – laid out several immediate actions to protect the industry. The group focused on retaining and rehiring employees and keeping hotels from shutting down through access to liquidity and low interest loans, including for small businesses.
Some quotes from the CEOs present:
Best Western Hotels & Resorts President and CEO David Kong: “For nearly 75 years, Best Western has been a brand with small family businesses at our core. Most of our hotels are owned and operated by hardworking men and women with their children growing up in the business. For them, their hotels represent their families’ legacy and their future. Many are being forced to close their doors with no assurance of when they will be able to reopen. Their employees are left with no gainful employment and the resultant financial hardship. It is imperative that the government step in immediately with loan programs that provide capital and liquidity to help small businesses survive as well as other employment programs to help the impacted employees. The situation is dire.”
Choice Hotels International President and CEO Pat Pacious: “The majority of our 13,000 franchisees are small business hotel owners who have to meet payroll, pay their mortgages every month, and support their families during this crisis – as well as take care of their guests. As I told the administration today, while Choice Hotels is acting to assist our franchisees, the federal government has a critical role to play in helping minimize the impact and disruption to the livelihoods of small business hotel owners and their employees, as well as stabilizing the economy during this difficult and unprecedented time.”
Hilton President and Chief Executive Officer, Chris Nassetta: “In Hilton’s 100-year history, we have never seen anything like the current situation. I am hearing directly from hotel employees concerned about their mortgage payments and hotel owners worried about making payroll. Nearly 80% of the hotels in our U.S. network are franchise properties that employ less than 50 people, and we are using every tool in our toolkit to keep these small businesses viable. Ours is an industry of people serving people, and that’s why we’re asking Congress and the Administration to help shield them from the economic impact of the coronavirus, so they can be part of the recovery that will follow.”
Marriott International President and CEO Arne Sorenson: “The COVID-19 pandemic has resulted in an unprecedented decline in demand impacting our hotels and our associates. We are looking to government to support the hospitality industry through this period of time so we can assist our associates and hotel owners, many of whom are small businesses.”
MGM Resorts International Chairman and CEO James Murren: “Within days we have transformed from a vibrant industry welcoming people from around the world, to one experiencing a total shutdown of business. Addressing this public health emergency required major collective action which is why MGM shut down our operations. But it comes at a cost to our tens of thousands of employees, small businesses and communities who depended on us. We look forward to a productive dialogue on how to ensure that when it is safe, the gaming industry can be in a position to open our doors so that we and the 2 million jobs that depend can be part of the economic recovery that is to come.”