5 things to know: 26 March 2020
5 things to know: 26 March 2020
26 MARCH 2020 9:30 AM

From the desks of the Hotel News Now editorial staff:

  • How stimulus bill could help US hotel industry
  • Hotels around the world offering their beds to hospitals
  • Flexibility with groups can improve relationships
  • US hotel results for week ending 21 March
  • Record 3.28 million apply for jobless claims in US

How stimulus bill could help US hotel industry: The U.S. Senate approved the stimulus bill known as the CARES Act in a late-night vote Wednesday, sending it to the House of Representatives for another vote. The bill contains provisions that would help specific industries, including hotels, The New York Times reports.

Some hotel owners, even those who employ thousands, would be eligible to receive small-business loans, the article states.

“The provision says that if a company owns multiple hotels, even if the overall hotel or restaurant chain has more than 500 employees—the limit to qualify for treatment as a small business—it will still be able to take advantage of the small-business benefits offered in the rescue package,” the newspaper reports. “That means loans from the federal government worth up to 2.5 times the firm’s monthly payroll … will not have to be repaid if the company uses them to keep paying employees during any coronavirus shutdowns.”

The American Lodging & Hotel Association sent out a news release in support of passage of the bill, but the organization also called for a change in the payroll limitation on SBA loans.

“The legislation limits an SBA loan to 250% of average monthly payroll,” AHLA President and CEO Chip Rogers said in the release. “This limit will not allow a business owner to meet both payroll and debt service obligations beyond an estimated four to eight weeks. Consequently, it will result in furloughing the very workers the bill seeks to protect. Since the measure reduces debt forgiveness with any reduction in payroll, hoteliers would be forced to use the entire loan amount on payroll, at the expense of debt service. The harsh reality is that travel restrictions and mandated business closures remain in place. The outlook for the foreseeable future is zero revenue for most hotels. If a hotelier cannot make debt payments, the business will go under and the jobs are lost.”

Hotels around the world offering their beds to hospitals: As hotel occupancies reach all-time lows due to the coronavirus (COVID-19) pandemic, hoteliers are offering their beds for use in treating patients as well as accommodating healthcare providers and first-responders, CNN Reports.

The U.S. Army Corps of Engineers is working to convert more than 10,000 hotel and college dorm beds to hospital beds in New York City, the article states. The corps is considering doing the same in California and Washington.

“These hotels are empty. The people don’t have jobs,” Lt. Gen. Todd Semonite, chief of engineers and commanding general of the U.S. Army Corps of Engineers, said during a news conference at the Pentagon.

“We go in and cut a contract to be able to have the state set up a lease with that particular facility, and then we would then take the building over. And in an exceptionally short amount of days, we would go in and turn this into an ICU-like facility.”

Flexibility with groups can improve relationships: As many groups cancel or rebook meetings because of COVID-19, hoteliers are finding that by taking a flexible and creative approach, they can still bring in revenue while maintaining and building relationships with their clients, reports HNN’s Robert McCune.

“We know that right now companies can’t hold conferences, but they want to live-stream,” said Allison Handy, SVP of sales, marketing and revenue optimization at Prism Hotel Group. “Maybe they don’t want to live-stream from their bedroom desk with their dog barking in the background. If we can provide a place for them to live-stream a conference or message to their teams, that’s a small source of revenue.”

U.S. hotel results for week ending 21 March: The U.S. hotel industry reported negative year-over-year results in the three key performance metrics for the week ending 21 March, according to data from STR, parent company of HNN.

U.S. hotels reported a 56.4% drop in occupancy to 30.3% along with a 30.2% decrease in average daily rate to $93.41, resulting in revenue per available room falling 69.5% to $28.32.

“RevPAR decreases are at unprecedented levels—worse than those seen during 9/11 and the financial crisis,” Jan Freitag, STR’s SVP of lodging insights, said in the news release. “Seven of 10 rooms were empty around the country. That average is staggering on its own, but it’s tougher to process when you consider that occupancy will likely fall further. With most events cancelled around the nation, group occupancy was down to 1% with a year-over-year RevPAR decline of 96.6%. The industry is no doubt facing a situation that will take a concerted effort by brands, owners and the government to overcome.”

Record 3.28 million apply for jobless claims in U.S.: Reflecting company layoffs across the country as a result of the COVID-19 pandemic, initial numbers from the U.S. Department of Labor show a record 3.28 million Americans have applied for unemployment benefits for the week ending 21 March, The Wall Street Journal reports. That surpasses the previous record of 695,000 set in October 1982.

Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush, told the newspaper the jobless rate could approach 20% over the next few months, an unemployment level economists believe occurred during the Great Depression. Northern Trust Chief Economist Carl Tannenbaum said if half of the employees in industries such as restaurants, retail and personal services are laid off, the unemployment rate could jump by 10 percentage points to more than 13%.

“That is well above the post-World War II record high of 10.8% at the end of the 1981-82 recession,” the article states.

In the United Kingdom, more than 100,000 people were attempting to apply for jobless claims earlier this week as well, BBC News reports.

Compiled by Bryan Wroten.

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