State’s hotels facing cold winter
Labor Day some respite, but industry in crisis, official says
For the Courtyard by Mariott hotel in Hot Springs, the coming Labor Day weekend almost mirrors the good old days — the holidays before the covid-19 pandemic.
The 5-year-old, 98-room property off Central Avenue is almost full, according to general manager Kurt Schatzel. One of the nights, he said, there are no vacancies.
The property, in the state’s tourism capital, typically attracts thousands of tourists a year for horse racing at Oaklawn, the nearby lakes, the national park and other attractions.
“It’s going to be a long, cold winter,” Schatzel said.
The industry is showing little sign of recovery from a pandemic that has decimated tourism and business travel that until this year provided almost recession-proof service jobs for millions.
“Our industry is in crisis,” said Chip Rogers, president and chief executive officer of the American Hotel and Lodging Association. “Thousands of hotels are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come. We need help urgently to keep hotels open so that our industry and our employees can survive and recover from this public health crisis.”
An analysis that the association released this week found that:
■ Four out of 10 hotel employees are still not working.
■ Almost two-thirds of hotels remain at or below 50% occupancy, which is below the threshold at which most hotels can break even and pay debt.
■ Consumer travel remains at an all-time low, with only 33% of Americans reporting that they have traveled overnight for leisure or vacation since March and just 38% saying they are likely to travel by the end of the year.
■ Urban hotels are suffering the most and facing collapse with cripplingly low occupancy’s of 38%, significantly below the national average.
■ Covid-19 has left hotels in major cities across the country struggling to stay in business, resulting in job loss, and dramatically reducing state and local tax
revenue for 2020 and beyond.
The association is calling on Congress to quickly provide aid through a targeted extension of the Paycheck Protection Program, establish a commercial mortgage-backed securities market relief fund and to make structural changes to the Main Street Lending Facility to “ensure hotel companies can access the program.”
The analysis was released the same day that Simmons Bank, in a conference call with analysts, cited its portfolio of hotel loans as an area of concern because of low occupancy levels.
“We’ve got 31 hotels whose occupancy is below 30%,” said Simmons president and chief executive officer George Makris. “We’ve got seven hotels, whose occupancy is above 70%. We have 84 hotels, whose occupancy is between 30% and 70%, and we have 13 that are not open [still under construction].”
Schatzel counts only a couple of good weekends for the hotel in 2020 but considers his property fortunate compared with others that rely on group meetings.
“Leisure is down significantly,” he said. “But the convention hotels have taken a beating in Hot Springs and Little Rock. They lost all that group business.”
Annette Nichols, general manager of the Hyatt Place Rogers Bentonville, said the hotel was 70% filled a year ago on Labor Day weekend, filled by a concert and fans in town for a Razorbacks football game. Typically, the 103-room property is 50% occupied during the holiday weekend.
This weekend, occupancy will be 30%, she said.
Nichols spoke after taking a shift working the front desk. Last week, she was in housekeeping. Her assistant general manager and sales director are doing the housekeeping this week. The staff has fallen to eight, from 30 before the pandemic.
With federal aid ending, worse is yet to come, she said.
“There will be hotels that will close down until the end of the year,” Nichols said.
Something like normalcy was set to return earlier this summer when youth sports travel team tournaments were scheduled. But the Kansas governor said anyone traveling to Arkansas would have to quarantine for two weeks upon their return.
Cancellation calls flooded the Northwest Arkansas hotels.
“More than 350 room nights were dropped in two hours,” Nichols said.
The Aloft Little Rock West, a $13.5 million property on Rahling Road marketed to young business travelers, was completed and ready to open just as the pandemic started.
Bhu Makan said the staff for the Aloft, his group’s latest development, was hired and trained and ready to open on March 17, St. Patrick’s Day, a Tuesday. The Sunday before, an outside team arrived to hook up the computer system. On Monday morning, the home office called them back.
But pandemic or no pandemic, the 127-room property had to open eventually. That came in May.
“Our business, the way it is structured, is it has a lot of fixed costs,” Makan said. “No matter if we have anybody occupying the room or not, it’s going to be a cost to us. … Summertime is usually a good time to open up a hotel because you’ve got some leisure traffic. We said, ‘OK, we’re going to be slow.’”
The hotel has gotten by with a staff “that has come together under difficult circumstances” and mix of leisure travelers and local “staycation” customers, and other locals enjoying the hotel bar WXYC, which has a “great outdoor space,” he said.
The Aloft and many other properties rely on corporate travel, which hasn’t returned to normal levels.
“That’s where most hotels do their business,” Makan said. “We are going into the winter season. It is much harder and tougher, especially during covid.”