The World Health Organization has officially characterized the current coronavirus outbreak as a pandemic. As the number of COVID-19 cases continues to rise in the United States, along with the virus’ death toll, the travel industry is increasingly feeling the effects of decreased bookings and cancellations. Earlier this week, Tourism Economics, an Oxford Economics company, released a report on the potential economic impact of COVID-19, estimating that the second and third quarters of 2020 could see 6 million fewer international visitors and a loss of $19 billion in spending—a number that doesn’t factor in declines in domestic travel. STR data from the first week of March shows year-over-year drops in occupancy, ADR, and RevPAR for U.S. hotels, and even steeper declines in markets like San Francisco and Seattle, where RevPAR fell 45.5 percent and 34.8 percent, respectively.
In a call with press on Wednesday, Chip Rogers, president and CEO of the American Hotel & Lodging Association (AHLA), said that the hotel industry is on a path toward a financial impact more severe than what the industry experienced post-9/11 and following the financial crisis of 2007-2008. Rogers urged the public to make “calm, rational, and fact-based decisions” around travel while remaining vigilant and taking precautions, echoing a statement signed by 150 travel leaders on Tuesday.
“We are in daily contact with public health authorities and are acting on the most up-to-date information on the evolving coronavirus situation,” Rogers said. “Though headlines may be worrisome, experts continue to say that the overall coronavirus risk in the U.S. remains low. At-risk groups, older individuals, and those with underlying health conditions should take extra precautions.” Rogers added that individual hotels have protocols in place that align with CDC guidelines to mitigate the spread of the virus, like increasing the number of hand-sanitizer stations, cleaning guestrooms more frequently, using cleaning materials with a minimum of 60 percent alcohol content, and washing laundry at a minimum water temperature of 120 degrees Fahrenheit.
As the industry continues to spread the message that travel in the United States is safe for healthy Americans, travel leaders are also meeting with officials in the White House and Congress to discuss the reality of the current situation and its impact on hotel owners and employees. “We are concerned about the steady pace of cancellations of conferences and meetings, and its impact on employees and small business owners,” Rogers said. “Sixty-one percent of the hotels in the United States are small businesses that will face difficult decisions should these cancellations continue.” In addition to hotels, businesses from restaurants to retail are also feeling the downstream impact of event cancellations.
Brian Crawford, AHLA executive vice president of government affairs, said that as occupancy and revenue decline, many small business owners will be operating with negative cash flows. “This means that hotels will be unable to fund their operating expenses, including paying their workforce and for their benefits, and ensuring their debt service payments to their lenders,” Crawford said. In partnership with the U.S. Travel Association, AHLA is asking the Administration to help small business owners and employees by ensuring access to capital and liquidity, as well as “asking the Treasury Department to work with banks on debt forbearance and flexibility around loan options,” Crawford said.
“We’re also simultaneously working with leaders on Capitol Hill to talk to through what a potential economic stimulus package could look like that will benefit both our employees and employers,” Crawford added, with a focus on economic stimulus and disaster-relief packages passed after 9/11, Hurricane Katrina, and the Gulf of Mexico oil spill of 2010. “There’s a voting record and a precedent for these types of provisions,” Crawford explained.
The House is expected to vote on a stimulus package on Thursday. Crawford said that AHLA will continue to have conversations with the White House and Congress. “I remain hopeful that an agreement will come to fruition soon,” he said.