Hotel operators who were quick to court demand from health care workers and others in need due to the spread of COVID-19 said they are better positioned for recovery than their competitors.
REPORT FROM THE U.S.—During a painful period for the hotel industry, companies that were quick to work with governments and health care organizations to cater to first responders and others in need of emergency housing are performing better than their counterparts and better poised for recovery, sources said.
Sloan Dean, president and CEO of Remington Hotels, said as the gravity of the COVID-19 pandemic was hitting across the U.S., his company acted quickly to send the message that it would be a resource.
“In March, we were already (negotiating) with the city of Dallas (to house health care workers), while our competitors didn’t want to touch it because of the liability or stigma of being the ‘COVID’ hotel,” he said. “We were swift to get into that business because we knew, at least for the next 60 to 90 days, that’d be the only business, and someone needed to be there to help. I think we’ve handled that pretty well.”
He said concerns about stigma for a hotel are now out the window with the virus being as widespread as it is, and housing health care workers and vulnerable populations will only make hotels look better.
“If anything, were getting credit for trying to help and being willing to take that risk and house people where there’s a need for shelter,” he said.
Mike Marshall, president and CEO of Marshall Hotels & Resorts, said his company similarly prioritized getting that demand in their hotels where possible.
“We’ve been heavily going after it, because our approach for our hotels is trying to stay open as long as we can,” he said. “And the longer we stay open, the more demand that is coming to us. … Our thinking is that once we do shut down, it will be so much harder to get back up and running.”
Dean and Marshall said from a financial perspective, the focus is on covering operation costs at hotels, but that’s better than what a lot of hotel companies are doing at the moment.
Marshall said his company has rooms in Manhattan booking for $75 a night, which he described as “break even.” Dean said roughly 10% of his company’s portfolio “is profit black right now” with the possibility of roughly a third of the portfolio being profitable by May.
“I’m not sure there are many other people who can say that,” he said. “Our competitors who shut down half of their hotels are completely just burning cash.”
At the same time, this demand far from makes up for what hotels would have seen in a more typical scenario.
“This is helping to cover 20% to 30% of fixed costs, offsetting that cash burn and allowing some people to stay employed,” Dean said.
He noted he’s proud of how his company has handled the turmoil, although that’s not the same as being happy with the state of things.
“It makes me sick to my stomach that out of our 7,000 associates, we only have 500 working right now,” Dean said. “The day I feel comfortable with that is the day I need to resign.”
Finding that demand
Marshall and Dean said their companies were proactive in reaching out to health care groups and local, county and state governments to secure demand for both health care workers and homeless populations seeking emergency shelter.
Perhaps more than usual, performing well now depends on being in the right location. Both CEOs said they are seeing significant demand for hotels in New York.
“We have a hotel in (Yonkers) where we’re running 80% occupancy,” Marshall said.* “They can’t get enough doctors and nurses in, and they’re still bringing more people in.”
He said his company has offered some medical groups exclusive use of properties, but that option hasn’t been taken just yet.
Dean said the Embassy Suites Midtown Manhattan is currently running at 75% occupancy, housing only doctors and nurses helping deal with the outbreaks in that city.
He said his company has also had success in Boston, Phoenix, Austin and Raleigh-Durham, North Carolina, although each of those required a tailored approach.
Some are structured as group contracts for health care workers, while others are leases to allow government entities to take over the entire property. The latter scenario is what happened with the Marriott at Research Triangle Park in Durham, North Carolina, where the local government has taken over the property to house the homeless in the area.
“That lease runs for 90 days, and they’ve been occupying it for about 10 days,” he said. “We did that because we wanted to help, and the faster the local community recovers the faster hotels recover.”
He noted the contract to lease out hotel buildings includes the caveat of keeping a small number of employees necessary to operate the hotels, such as the GM and head of engineering, but otherwise hands over responsibility for services like food and beverage and housekeeping to local government.
Marshall said hoteliers have to be patient and flexible working with these groups.
Sources said they’ve quickly adopted “rigid” cleaning and safety procedures, which Dean said includes getting personal protective equipment for staffers to avoid spreading infections.
Dean said while his hotels have housed several guests who tested positive for the virus, there has been no instances of transmission or infection among staff at a Remington Hotel, which he attributes to the success of their measures.
“We have no restaurants or bars operating, just lobbies and rooms, and we clean the lobbies on an hourly basis,” he said. “We’re trying to keep things as safe and clean as possible.”
Marshall said his company also has plans in place to get properties back into operation for other travelers as soon as that’s feasible.
“We’re putting procedures in place to deep-clean hotels and make sure we’re ready and certified to be up and running again and clean,” he said.
Sources said housekeeping approaches must change with these types of groups in house.
Dean said housekeeping is still offered daily sometimes for health care workers’ rooms, with housekeepers in protective equipment. Marshall noted housekeeping is scaled back to weekly in other cases.
Some groups also contract out third-party cleaning services.
Food-and-beverage procedures have largely changed, too, to provide prepackaged meal delivered to guests’ doors with no human to human contact, Dean said.
Dean said services, staffing and liability vary depending on whether a hotel houses groups of health care workers or is leased out entirely to one group.
He noted in his company’s case—where deals have been signed with governmental entities in both Raleigh-Durham and Austin—leases are structured to include fees for deep cleaning and possible property damage. Full-property leasing also helps protect employees, he said.
“The hotels are operating day to day with our guidance, but we’re not putting associates at risk,” he said. “In the cases of having first responders as a group block, you’re taking some slight risk that people could get ill. But what’s the alternative? People need a place to stay.”
Brands chipping in
Several brands have announced initiatives to open access to hotel rooms for health care workers, both those traveling to hot spots such as New York and those who may have been exposed to the virus and want to avoid spreading it to their families.
Hilton, for example, has partnered with American Express to provide up to 1 million roomnights to health care workers.
Jennifer Nycz-Conner, director of brand communications for Hilton, said those rooms will be paid for through a partnership between the brand and American Express and coordinated through relevant health care associations.
“Everybody is in this to do the right thing,” Nycz-Conner said. “We’re thrilled we could come out so quickly and be the first to make a big move when there’s such a need.”
She said Hilton is working with ownership groups to develop support and tools to best handle these kinds of stays.
“We’re creating a system that works for everybody, protecting their assets with increase cleaning and training for team members on working with first responders,” she said. “We’re offering a lot of support.”
*Correction, 24 April 2020: This story has been updated to list the correct location of a hotel.