Most affected by the shutdown are those hotels that rely heavily on national park business and hotels in Washington, D.C., that rely on tour groups visiting historic monuments.
REPORT FROM THE U.S.—Amid the second week of a partial government shutdown across the United States, many tourism-related communities are beginning to feel the effects, and the hospitality community is not immune.
The hotels experiencing the hardest hits are the ones that rely heavily on national park business, in or near Yellowstone National Park or the Grand Canyon, for example. Hoteliers in Washington, D.C., also are reporting dips in demand as tour groups cancel or delay trips to historic monuments and museums, such as the closed Smithsonian Institution.
The shutdown began 1 October when the House of Representatives and Senate couldn't meet a deadline to agree on a bill to fund the government. There are many departments of the federal government that need to be funded each year in order to operate; if Congress can't agree on how to fund them, they must close. “Essential” government functions, including anything related to national security, public safety or programs written into permanent law, such as Social Security, will continue to operate.
Perhaps suffering the most is Xanterra Parks & Resorts, which owns and operates 29 properties, with 21 located in national parks including Death Valley, Yellowstone, Crater Lake, Zion and the Grand Canyon. Many of the lodges are seasonal operations, meaning the government shutdown has forced an end to the very busy fall season. A company spokeswoman said Xanterra is losing nearly $1 million per day in revenue, not including overhead.
Five Xanterra properties inside the Grand Canyon National Park—which were all sold out before the shutdown, according to the spokewoman—were forced to close and ask guests to leave. Two Grand Canyon-area operations located outside the park remain open. However, the Grand Canyon Railway, which takes guests from those properties into the park, has been shut down.
“People are so upset. They’ve been waiting years to come here,” Bruce Brossman, director of sales and marketing for Xanterra at the South Rim of the Grand Canyon, told Hotel News Now. “This is the busiest time of year for many reasons. It’s the best time of year for hiking as the leaves are changing and the foliage is beautiful. We would be sold out every night, and we were.
“I think if you were coming from Europe to see the Grand Canyon you wouldn’t cancel at this point,” he continued. “People are still keeping the hotel and mule portions of their trip and doing different things in the area. The helicopter tours over the canyon are still open.”
The Washington, D.C., region also is experiencing significant impact, according to Mark Carrier, president of D.C.-based B. F. Saul Company Hospitality Group, which owns and operates full-service and select-service hotels, many of which are located in or around the capital.
“Demand for accommodations has been curtailed significantly as we have seen cancellations of corporate and government group meetings, transient mid-week and leisure demand. There have been many student tours that have cancelled or are being rescheduled,” Carrier wrote in an e-mail. “This has been particularly challenging as October is normally the strongest month in the second half of the year in D.C. The effects are widespread throughout the region and have resulted in a revenue decline that will be dramatic in the (central business district) and (nearby counties).”
Carrier said B. F. Saul’s hospitality group has experienced a 15-point dip in occupancy when compared to this time last year.
“The D.C. region is home and host to many government contractors, associations and businesses that derive their success from serving the nation through their relationships with the federal government,” he said. “It is also an area that hosts many leisure travelers from around the country and the world to visit memorials and attractions. This disruption has added to a year where D.C. was already the bottom performing market of the top 50 in the nation.”
Leaders weigh in
Marriott International is feeling the effects of the shutdown as well. CEO Arne Sorenson took to social media on Monday to address the concerns.
“The impacts ripple well beyond Washington, D.C. and past U.S. borders,” Sorenson posted to LinkedIn. “Others from around the world are watching this circus, which is embarrassing at best. Just like in each of the last few years, we are confronted with a failure of our political leadership that threatens an economy that wants to turn the corner to higher growth and employment.”
Sorenson said he is considering “swearing off” political contributions to any party, party-controlled entity or political contributions to those in the House or Senate who strictly adhere to either party line.
“If ever there is a time for true leadership, it is now. What concerns me is there doesn’t seem to be much incentive to change course,” he said.
InterContinental Hotels Group, which is embarking on a project to take over management of hotels on many military bases from Army-run lodging, released a statement on the shutdown:
"The travel and tourism industry is a critical part of the U.S. economy, providing jobs for millions of people and generating revenues for small business owners, vital corporations and the government. As a major hotel company, we want to ensure that domestic travelers and foreign visitors to the U.S. are able to continue traveling and have the most convenient experience while doing so.
“We are monitoring the government shutdown situation closely, including the possible short- and long-term impacts on the hotel industry and our business, and continue to work with our industry trade associations … to advocate for a speedy resolution.”
Fix it fast
A resolution seems to be top priority for many.
Jan Freitag, senior VP of global development at STR, parent company of Hotel News Now, said the longer the shutdown drags on the more potential for impact on hotel performance.
“There’s indirect impact,” he said. “A guy who’s driving a tour bus to and from the Smoky Mountains has less work, and those guys now can’t go on vacation. Those are things we won’t see in the weekly or monthly numbers.”
Dave Johnson, president and CEO of Aimbridge Hospitality, said any time a hotel customer as large as the federal government is taken away, it will have an impact.
“If it drags on more than 60 days … it’s going to affect all of us regardless of what industry we’re in,” he said. “I think that even our challenged leadership in Washington is going to figure out a way to get some kind of compromise in the next week or two.”
Brossman, who is working to salvage as much business as possible for Xanterra, said he is taking things one week at a time.
“The last (government shutdown, which took place in 1995) lasted 21 days so we’re thinking in those terms,” he said. “This one hurts because it’s at the busiest time of year. We’re looking at what we can do to keep people busy.”
“We certainly hope that the administration and Congress join together in negotiations to get this impasse behind us and to move forward in a far more predictable manner,” Carrier said.