Coronavirus travel restrictions batter US hotels

The novel coronavirus has pummeled the US hotel industry as state-imposed travel restrictions probably mean bookings won't recover until the third quarter of 2021 at the earliest, industry officials said Monday.

Many hotel operators have had trouble making mortgage payments, and federal aid or other government programs such as funds for temporarily housing the homeless, while welcome, are viewed as stopgap measures.

The effect of the COVID-19 pandemic on the industry is nine times greater than the decline in bookings following the Sept 11, 2001, terrorist attacks in New York and Washington, the American Hotel and Lodging Association said.

Simply put, there aren't enough customers to keep hotels financially sound.

Mike Somers, CEO of the New Hampshire Lodging and Restaurant Association in Concord, was downbeat on the industry's immediate prospects.

"Demand is soft," he told China Daily. "Customers are terrified about traveling. Anyone coming to New Hampshire from outside New England must quarantine for 14 days. That puts pressure on the industry."

Somers said he expected little change until a coronavirus vaccine is developed and widely distributed.

"Elected officials are being cautious and want to avoid a spike in cases," he said. "Things aren't going to get significantly better anytime soon."

It's a nationwide problem. The Baird/STR Hotel Stock Index is down 42.7 percent through July 31 as investors flee the hospitality industry.

"Hotel stocks underperformed again in July as industrywide occupancy growth continued to moderate on a weekly basis," said Michael Bellisario, senior hotel research analyst at Baird, an investment bank and wealth management company based in Milwaukee, in a report.

"Investors remain focused on the impact of rising coronavirus case counts on broader travel trends, and prior optimism about prospects for business travel to return in a meaningful way this fall has faded."

Companies tracked in the index include Extended Stay America, Hilton, Hyatt, InterContinental, Marriott and Wyndham.

"The (hotel) industry in New York City is facing its worst crisis in nearly 100 years," said Vijay Dandapani, CEO of the Hotel Association of New York City, in an email to China Daily.

"The consensus is that a recovery will not begin until the third quarter of next year with revenue approaching 2019 levels in 2025."

He said about 200 of the city's 700 hotels have closed temporarily or permanently and another 200 are housing the homeless as part of an effort to limit the spread of the virus.

"Federal aid can help, but it's a bit like keeping a patient on dialysis — debilitated and never able to be self-reliant," Dandapani said.

During the coronavirus outbreak, the city moved roughly 9,500 homeless people from shelters into 63 hotels across the city, 32 of which are in Manhattan.

New York Mayor Bill de Blasio recently placed many in hotels on Manhattan's Upper West Side, one of the city's more expensive neighborhoods.

Critics called the decision "anti-gentrification" as drug use spilled into the streets, and some sex offenders were placed in hotels close to parks, schools and churches.

Initially, the mayor said the homeless would remain in the hotels for months, but after a public outcry, he appeared to modify his position.

"It's important to note that as the health situation has continued to improve, we're going to start the process of figuring out where we can get homeless individuals back into safe shelter facilities and reduce the reliance on hotels," de Blasio said.

But so far, the mayor has moved some homeless people to a hotel in Brooklyn, sparking the same public outcry the action prompted in Manhattan.

Due to record-low travel demand, thousands of hotels can't afford to pay their commercial mortgages and face the possibility of permanent closure, Chip Rogers, CEO of The American Hotel and Lodging Association, a Washington-based trade group, told China Daily.

Rogers said the hotel mortgage-delinquency rate is about 25 percent — the highest on record.

Many banks offered 90-day forbearances last spring, but the grace period is running out. Without additional federal action, including making additional loans available, many hotels will close, and unemployment will rise, he said.

Representatives Van Taylor, a Texas Republican, and Al Lawson, a Florida Democrat, last month introduced a bipartisan bill that would require the US Treasury to establish and administer a program to guarantee equity investments in commercial real estate borrowers affected by the pandemic.

"The money is there and will be paid back if the rules are rewritten," Rogers said.

"If you can't pay the mortgage, you can't stay in business."