The U.S. hotel industry, which is mostly constituted by small businesses, is on the brink of a major collapse. Four out of 10 hotel employees are still out of their jobs. The occupancy rates are at or below 50 percent in about 65 percent of all U.S. hotels while social distancing regulations continue amid another spike in viral infections, consumer travel stands at an all-time low.
Urban hotels have been particularly hit and are facing an extreme meltdown with critically low occupancies of just 38 percent, remarkably lower than the national average. That’s to say, the hospitality sector has been suffering like no other, prompting massive lay-offs and considerably reducing state and local tax revenue for 2020 and beyond.
Hotel owners create millions of hotel jobs across the country, making significant investments in their communities through development projects and taxes. But when people stopped traveling, the multi-billion dollar industry started to crumble, dragging some of the most iconic business and touristic hotels with it, such as New York City’s Marriott hotels in Manhattan, Omni Berkshire Place in Midtown, the legendary Roosevelt Hotel, the 42-story Times Square Edition hotel, Hilton Westchester, and W New York Downtown.
According to a recent report, 20 percent of the state’s total hotel supply, which accounts for nearly 250,000 rooms, could be permanently closed, considering over 34 percent of them are delinquent on their debts. Analysts affirm that this is only “the tip of the iceberg”. New York is not alone, in cities like Houston, Los Angeles, and Chicago, hotel delinquencies are rising significantly.
Those that still have plans to reopen do not anticipate a huge spike in demand due to health safety measures that do not encourage social gatherings. In that sense, they will be unable to host conventions or large sports events, which are an essential part of their business, and aren’t expected to return until at least deep into 2023.
The biggest part of the hotels’ revenue relies on large conventions where the profits of banquets and. But now that home-office tendencies are rising, but the hotel occupancy figures will never come back to previous levels.
Before all 2020 events, the hotel industry was already facing mounting pressure from the growing private room and home online rental market. People have been coming back to the rental market faster than hotels. As a consequence, 67 percent of all U.S. hotels will only be able to last six more months absent any further relief, which means thousands of hotel workers will be let go.
Furthermore, unable to pay their commercial mortgages the hotel industry apocalypse is not only creating a major debt bubble inside the housing market as it is decimating the hospitality industry and severely impacting the labor market.
Experts on the field affirm the global economy cannot fully recover until the travel industry recovers, considering many communities exclusively depend on tourism to power their economies. Since Congress postponed the pass of “The HOPE Act”, which would immediately provide liquidity to the industry, many hotels won’t survive until another stimulus relief is issued, which means that the memorable hotels where you and your family once vacationed may soon not be there anymore.
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