Texas hotels slugged by virus

For months, empty lobbies and a deserted River Walk left no doubt that the COVID-19 pandemic was bad for the hotel business. A new report makes clear just how bad: Texas hotels lost nearly two-thirds of their revenue during the second quarter of 2020.

The state’s hotels took in $1.175 billion during the three-month period — a 64 percent decline from a year earlier, according to Source Strategies, a San Antonio consulting firm that tracks hotel occupancy and revenue.

“This is the biggest revenue drop we have ever seen, more than three times what we saw at the worst part of the Great Recession in 2009,” said Paul Vaughn, senior vice president of Source Strategies. “It was a precipitous demand drop across the board — business travel, leisure travel, everything was off in that quarter.”

The report shows that no Texas metro area was immune.

San Antonio hotels on average filled just 32 percent of their rooms during the three months ending June 30. That was the lowest occupancy rate among the largest metro areas in Texas and the secondworst among all metro areas in the state, the report said.

Only the Bryan-College Station area had a lower occupancy rate — 26.5 percent.

The Dallas-Fort Worth-Arlington metro fared only slightly better than San Antonio, filling 31.8 percent of its rooms.

Austin had an occupancy rate of 33 percent and Houston 37 percent.

Hotel revenue suffered as hotels struggled under coronavirus restrictions that kept their doors closed and tourists and business travelers away.

San Antonio hotel revenue plunged to $97.1 million during the second quarter, down 74.1 percent from the same period a year ago, when 67.2 percent of rooms were filled, the report said.

Austin-area hotels saw an even bigger revenue drop — 79.7 percent, the highest in the state. Austin hotels took in $93.2 million in the quarter.

Houston hotels had the smallest revenue drop among the major metro areas: 61 percent. The region’s hotels took in $257 million in the second quarter.

“Clearly, the localities with the most to lose lost the most,” Vaughn said. “You look at all the major metros: San Antonio, Dallas, Austin, Houston, everyone was way down.”

The cost goes beyond hotels’ bottom lines. Thousands of hotel workers have been laid off across the state. In Texas, hotel employment has fallen by more than 30,000 jobs over the past year, according to the Labor Department.

Ultimately, the recovery of the hotel industry in San Antonio and elsewhere will depend on the number of coronavirus cases and how safe people feel when traveling, said Keith Phillips, senior economist at the Federal Reserve Bank of Dallas.

“People may not feel comfortable until there is a vaccine,” he said.