The American Hotel Industry in the Wake of COVID-19

December 14, 2020
Antonio Flores

Over the past eight months, establishments across America have closed down due to COVID-19 lockdowns. Restaurants, gyms, offices, or commercial properties, none are able to use their space as expected, and because of this, their businesses are frequently losing money or going out of business. Some businesses have managed to adapt; others have not. Small businesses in particular have been very hard-hit, even as many huge corporations gain billions. In particular, in this article we will focus upon the hotel industry and how the lockdowns have affected hotels’ ability to stay open. Hotels are one major source of commercial mortgages, and any trends in this sector will affect lending patterns accordingly.

First of all, rental volume at hotels has been devastated, with 80% of all hotel rooms going empty and 38% occupancy rate. Revenue has been cut in half, with an impact on the industry 9x bigger than 9/11.  40% of all Tsogo Hotels branches are closing. Hotels are competing for far less business, as travel restrictions limit the amount of traffic coming in and out of town. In addition, hotels are forced to take extra precautions to deal with customers that come inside, whether that be requiring face masks, closing off tables to comply with social distancing, or sanitizing surfaces.

One factor keeping hotels afloat is the recent rise in homelessness due to the eviction crisis. Because so many people are now on the streets, local jurisdictions are looking for places where large numbers of homeless people can stay. Hotels fit the bill, and are compensated for the lodging of homeless people. However, the homeless frequently have issues with drugs and mental health, leading to them disrupting the experience of the other guests and causing problems for the staff. Empty hotels are a source of lodging for the swelling number of homeless, but the homeless tend to cause other problems. 

To conclude, hotels face a very difficult environment in the post-coronavirus world. Many of them will close, and the rest will tend to make less money. For even major international hotel chains such as Tsogo Sun, huge percentages of all hotels could close, leading to the loss of hundreds of thousands of jobs in maintenance, logistics, and management. It remains to be seen how further waves of the pandemic will affect the economy and the hotel industry. However, hopefully the economy continues to recover so that hotels can recover their profits and come back. 

Links:

Hotels hit hard by COVID-19 lockdown

https://www.npr.org/2020/12/10/944684103/california-struggles-to-house-thousands-of-homeless-placed-in-hotels-during-pand

https://www.cnn.com/2020/04/08/us/hotel-rooms-industry-coronavirus-trnd/index.html

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