Half of the hotels in the U.S. could shutter amid the ongoing coronavirus pandemic, according to Chip Rogers, president and CEO of the American Hotel & Lodging Association.
“If something doesn’t happen quickly, since occupancy is trending toward zero, you’re going to see thousands of hotels go out of business,” Rogers told USA TODAY. While many will close and reopen at some point in the future, others won’t.
“It’s almost like getting hit by a bolt of lightning,” Rogers said when asked about the industry’s preparedness for a situation like this. “When you walk out your door, that’s the last thing you expect to happen to you.”
There are about 56,000 hotels across the U.S., and 25,000 of those could close in the next few weeks, at least temporarily, according to Rogers.
U.S. Travel Association President and CEO Roger Dow said closures will depend on various relief bills. He said 10% to 15% of hotels around the country go bankrupt right now, each week and month it grows more dire.
The hotel industry is seeking a total of $250 billion in bailouts for owners, employees and suppliers, saying devastated room bookings due to the coronavirus are resulting in closures and mass layoffs. Other sectors, like airlines and cruise lines, are also seeking relief.
Hotel occupancy rates dipped 24.4% to just 53% during the week of March 8 to 14, compared to the same week last year, according to STR data.
If occupancy dips below 25% to 30%, instead of trying to hold on to a skeleton staff, hotels would save money by closing their doors.
Marriott is poised to place tens of thousands of employees on furlough as the hotel giant reels from the coronavirus outbreak. And Hilton spokesperson Meg Ryan confirmed to USA TODAY that two high-profile, Hilton-managed properties are temporarily suspending operations: the Capital Hilton in Washington, D.C, and the New York Hilton Midtown.
Travel industry leaders met with President Donald Trump and Vice President Mike Pence this week and told them the impact of coronavirus is possibly two or three times as bad as after 9/11 and the financial crisis combined. Even since that meeting, hotel occupancies have declined, Rogers said.
When should people start booking hotels again?
At open hotels, guests won’t have to worry about social distancing, Rogers said, because of there are few customers left.
And guests can often book hotels last-minute without penalty.
“They can certainly have confidence to go ahead and book,” Rogers said, noting travelers can take advantage of good deals during the crisis.
The industry is working lobbying Congress and the Trump administration to ensure employees are taken care of, first and foremost, and that they have jobs to return to, Rogers said.
Marriott President and CEO Arne Sorenson addressed the difficult situation in a video posted to the company’s Twitter this week.
“I have never had a more difficult moment than this one,” he said, tearing up. He spoke of his lack of salary during this period, the restrictions in place at open hotels and hotel closures.
An Oxford Economics study predicted 2.8 to 3.4 million jobs in the hotel industry will be lost, compared to the 400,000 lost from the recession in 2001 and 9/11 and the 470,000 lost in the recession of 2007 to 2009.
As industry leaders note, the impacts of COVID-19 aren’t over.
“Through comparative analysis of the occupancy trends in China and Italy over the past weeks, we can with certainty say that we are not yet close to the bottom in the U.S.,” Jan Freitag, STR’s senior vice president of lodging insights said in a statement. “However, the timeline for that decline and the eventual recovery are much tougher to predict because there is still so much uncertainty around the COVID-19 case numbers in the U.S. and how serious citizens are when practicing social distancing.”
Contributing: Chris Woodyard, Nathan Bomey