US hotel industry on ‘brink of collapse’

Eloise Hanson Eloise Hanson Uploaded 25 March 2020

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US: Data from the American Hotel & Lodging Association (AHLA) shows a historic drop in room demand, with hotels operating at 25 per cent occupancy and estimations of nearly 3.9 million job losses in the coming weeks.

Since mid-February, US-based hotels have lost $2.4 billion in room revenue as reported by the AHLA, and is currently on pace to lose more than $200 million in room revenue per day based on current occupancy rates.

On its website, the AHLA refer to the US hotel industry as "on the brink of collapse," stating that "rapidly falling occupancy rates will have a devastating impact on jobs." 

Layoffs and furloughs are expected to affect more than 80 per cent of hotel staff, and with projected occupancies set to reach below 20 per cent for upcoming months, 33,000 small businesses are at “immediate risk”.

According to research by Oxford Economics, if hotel occupancy drops to 16 per cent, the hotel industry would lose:

- 950 million room nights

- $925 billion of total business sales

- 1,725,000 direct hotel operations jobs

- 6.5 million total jobs with $300 billion of wages (including supply chain)

- $500 billion of GDP

- $415 billion of guest spending

Chip Rogers, CEO of the AHLA, said that the coronavirus has already had more of an impact on the US hotel industry than the September 11 terrorist attacks and the Great Recession combined.

A state by state breakdown reveals that California (-414,069), Florida (-305.146) and Texas (-268,797) are among the top three states reporting overall job losses.

The industry is calling for direct grants to workers, as well as assurances that franchises have access to low-interest loans or relief from their mortgage payments. 

The Standard Hotels has taken action by launching its own seeded relief fund to support staff layoffs. Amar Lalvani, CEO, said: “Our employees, like many others in the service industry, tend to live paycheck to paycheck. Most are hourly, often relying on tips. Many are immigrants without family infrastructure here. Few have savings. Most will not be able to pay rent next month. Without relief, many will leave our cities in a few months altogether.”

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