The COVID-19 pandemic has acutely weakened the lodging sector, with major companies announcing extraordinary furlough activities.
According to a report in restaurant business, the American Hotel & Lodging Association (AHLA) determined approximately 4 million lodging industry jobs have either been furlough or are on the brink of layoffs as a result of the new health crisis. Marriott has confirmed it could put tens of thousands of employees on indefinite layoffs and Pebblebrook Hotel Trust, a real estate investment trust that owns 54 hotels, said laid off 4,000 employees and plans to let another 2,000 go on indefinite suspension by the end of the month.
“We are looking at closing the doors at more than half of our properties,” said Pebblebrook CEO and AHLA Chairman Jon Bortz. “This is the reality we, and countless other owners and operators around the country, are facing in the wake of this public health situation.”
The AHLA said member hotels in major cities including Seattle, San Francisco, Austin and Boston have seen their room occupancy rates fall below 20%, while some hotels have shut down.
“The impact to our industry is already more severe than anything we’ve seen before, including September 11th and the Great Recession of 2008 combined,” said Chip Rogers, CEO of the AHLA.
A new report by Kroll Bond Rating Agency stated that the problems with the lodging sector would not stress banks with large commercial mortgage portfolio.
“Those with larger-than-average exposures to hotels typically have relatively conservative loan-to-values and debt service coverage combined with management expertise in the sector,” the report said.