Texas’ tourism industry has no quick path toward recovery
Most of us can return to our offices. Retail stores can sell online. Manufacturing can resume at a safe distance. But for the hospitality industry, no tourists mean no business.
Travel and tourism is Texas’ second-largest source of outside income behind oil, bringing in $80.3 billion in 2018, the Texas Economic Development & Tourism Office reports. Since the arrival of the novel coronavirus, that direct spending has dropped 86 percent, the Texas Travel Alliance reports.
A whopping 45 percent of the nation’s layoffs are from the entertainment and leisure industry, says the global employment firm Challenger, Gray & Christmas, Inc.
No sector will pay as high a price for a more extended period than leisure and hospitality. People may go back to their workplaces, but few are volunteering to get on an airplane, stay in a hotel or attend a convention. And they won’t for
some time.
The coronavirus pandemic has functionally shut down half the hotels in the United States, with 80 percent of the rooms sitting empty, according to the American Hotel & Lodging Association. The Bureau of Labor Statistics reports that at least 7.6 million leisure and hospitality workers have lost their jobs since March
In Texas, 1 in 5 hospitality and food service workers filed for unemployment in the six weeks from mid-March through late April. That’s about 280,000 people. Restaurant workers filed the most unemployment claims in both Houston and San Antonio, according to state data.
The pullback has hit San Antonio especially hard hit. Leisure and hospitality employed 13 percent of workers in the region, the Texas Workforce Commission reports.
Visit San Antonio, the nonprofit that promotes the city’s tourism sector, furloughed 40 of 83 staff members because of the pandemic. The organization introduced pay reductions based on salary level for those who remain, which is becoming industry practice.
“We are certainly not alone in making painful moves in the wake of this pandemic, but it doesn’t ease the disappointment of affecting the lives of employees who we regard as family,” wrote Casandra Matej, CEO of Visit San Antonio.
In Houston, 10 percent of residents work in hospitality, which is about the state average. The industry employed 339,000 Houstonians in February.
These are not the most well-paid workers, either. The average hospitality and food service worker in Texas earned $21,000 in 2019. Most of them are women of color, and nationally, women made up 55 percent of the layoffs and furloughs.
We should not be surprised, then, that the layoffs have an ethnic dimension. The unemployment rate for Hispanics is the highest at 18.9 percent. African-American joblessness shot up to 16.7 percent. The non-Hispanic white rate was 14.2 percent.
The CARES Act, which was intended to keep people employed, contributed to the job destruction. The Paycheck Protection Program requires companies to spend the money on rent or payroll, but that’s only 47 percent of the cost of running a hotel, the American Hotel & Lodging Association reports.
The money also was too little, too early. The timeperiod to spend the money is running out, even though hotels and restaurants are unlikely to resume regular business before next year, said Chip Rogers, president of the Association. The industry needs more aid to avoid more significant losses.
The Texas Travel Alliance, meanwhile, is pushing for people to start planning their Texas vacations as the state reopens. The group has launched the “Life’s Better in a State of Travel Economic Recovery Campaign,” asking Texans to do their part for the economy by going on vacation.
I’ve got to give them credit for taking their best shot, but the die is cast until the COVID-19 threat has passed. As much as I’d love to spend a long weekend in Fort Davis, I am more worried about my elderly family members’ health, and so are most
Texans.
Sadly, what starts in the hospitality industry spreads to other sectors. Laid-off workers struggle to pay rent and cover groceries. They slash discretionary spending at other businesses, which then see their revenues drop.
The state government relies heavily on tourismrelated taxes, taking in $4.5 billion last year. Cities and counties collected $3 billion in hotel occupancy taxes. Without help from the federal government, state and local governments will end up laying off employees, compounding the economic crisis.
In Houston, Mayor Sylvester Turner said Wednesday that he would furlough about 3,000 city workers.
The Coronavirus Recession will linger longer than any of us wants. But the first step to devising a recovery strategy to escape it is to understand the depth and breadth of the crisis. Not to mention having some empathy for those most affected.