• The US hospitality industry is struggling to weather the coronavirus pandemic, according to a new report from the American Hotel and Lodging Association (AHLA).
  • The analysis found hotels are half-staffed and half-occupied, and while the industry is in a better place than it was in April, it is still in crisis.
  • Labor Day weekend hotel bookings are down 66{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} compared to last year, and if occupancy rates continue to stay so low, the president of AHLA said thousands of hotels will have to shutter forever. 
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The hospitality industry is changing — and struggling — amid the coronavirus pandemic.

The American Hotel and Lodging Association (AHLA) released an analysis on Monday that assessed how the hotel industry is weathering the pandemic, from how hotel workforces are evolving to how slowly hotel occupancy rates are recuperating.

The analysis found that 40{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} of those employed in hotels in February are still out of work. Overall, the travel and hospitality industry has been among the hardest hit by layoffs and furloughs amid the pandemic, with Bureau of Labor Statistics data showing the industry unemployment rate at 38{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c}, while the national average is 10.2{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c}.

Hotels being being half-staffed makes sense — they are also typically below 50{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} occupancy right now. In fact, two-thirds of hotels are less than half-full.

hotel occupancy

Chart per AHLA.

AHLA, STR, CoStar Realty Information, Inc.

Meanwhile, hotels in urban markets, once the crown jewel of the industry, sit at just 38{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} occupancy. Urban markets most impacted by the pandemic include San Francisco, New York, Chicago, Miami, and Boston.

“Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently,” Chip Rogers, the president of AHLA, said of the startling occupancy rates in a statement. Most hotels need to hit 50{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} occupancy to break even, according to the association.

“While hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago,” Rogers continued. Demand is at an all-time low.

Consider the upcoming Labor Day weekend. Bookings for the once wildly popular travel weekend are down 66{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} from last year.

ldw bookings

Chart per AHLA.

AHLA, Amadeus

And that’s after a slight improvement in demand. In April, the analysis found, eight out of 10 hotel rooms were empty. In August, five out of 10 hotel rooms were empty.

Recovery will continue slowly, according to the analysis.

Just one-third of Americans have traveled for vacation since March, and only 38{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} say they are likely to do so by the end of 2020. For comparison, the analysis noted that roughly 70{143106009d8b87d45252e1fd973f0c0835ad3aabba3679e828c3cd83539ae06c} of Americans typically travel for vacation at least once in any given year.

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