Tag: Pennsylvania Restaurant & Lodging Association

 

The COVID-19 pandemic has drastically reduced the number of people travelling both for business and leisure, and as Labor Day approaches hotel operators are saying it’s been a cruel summer.

The American Hotel & Lodging Association reports that 65% of hotels in the country have been operating below the breakeven point even the traditional Labor Day Holiday weekend bookings are down 66% from last year.

“While hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago. Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently,” said Chip Rogers, president and CEO of AHLA.

John Longstreet, president and CEO of the Pennsylvania Restaurant and Lodging Association said the Keystone state is also struggling, but seeing some improvement.

He said occupancy at Pennsylvania hotels has risen to about 42% from a low of about 17% in March and April.

Still, he said, it’s not enough.

“A well run hotel can break even at about 50%,” Longstreet noted.

According to the AHLA, urban hotels are suffering the most and facing collapse with cripplingly low occupancies of 38%, significantly below the national average.

Longstreet said the Philadelphia and Pittsburgh area hotels are even lower than the national average at around 30% occupancy.

The good news is that hotels in the Lehigh Valley and Pocono areas are doing better than average.

Hotels in the Poconos were at about 62% occupancy in July, with the Lehigh Valley just slightly lower.

“You’ve got a terrific resort area within driving distance of the largest metropolitan area in the country [New York],” he said.

He said the Lancaster area hasn’t been as lucky.  He said hotels in much of the Pennsylvania Dutch country were at about 42% occupancy during the summer, but Longstreet said he had talked to a number of hotels who were operating in the teens.

Nationally, consumer travel remains at all-time low, said the AHLA, with only 33% of Americans reporting they have traveled overnight for leisure or vacation since March and just 38% saying they are likely to travel by the end of the year.

But Longstreet said he expects that will return. His bigger concern is for business travel, which makes up more than half of all hotel stays.

“Corporate travel will be the slowest to come back,” Longstreet said.

He said some analysts are predicting that it will be 2023 before corporate travel returns to normal, but he is concerned that as more companies rely on remote meeting technologies, like Zoom, the decline will remain permanent.

He said event revenue has also bottomed out for hotels. He said weddings, parties and corporate events are always a major source of revenue for hotels and with limits on gatherings of over 25 people in the state that revenue has all but disappeared.

He estimates that about 10% of hotels won’t survive the pandemic.

Longstreet said the industry is hoping for federal relief.

While hotels did receive some PPP money, employee salaries aren’t the only expenses they need help with.

He said most hotels did not qualify for Main Street lending, which would have helped more.

He said the industry is hoping that the government will amend the requirements for Main Street loans, noting that only $60 billion of $500 billion in available funds have been dispersed because of the stiff requirements.

“There is a desperate need for the next round of funding with less restrictions on how it is spent,” Longstreet said.

The AHLA is also calling on congress for further assistance.

“Our industry is in crisis. Thousands of hotels are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come,” said Rogers. “We need help urgently to keep hotels open so that our industry and our employees can survive and recover from this public health crisis.”