AHLA: Hotels in some markets still in ‘depression cycle’

Urban markets that depend on business travel have the most difficulty in recovery

Of the top U.S. markets, 21 out of 25 remain at a recession or depression level, according to a report from the American Hotel & Lodging Association. Urban markets are in worst shape due to their greater dependence on business travel, with most still in a “depression cycle.”

THE RECOVERY MAY be under way, but most of the top U.S. markets, 21 out of 25, remain at a recession or depression level, according to a report from the American Hotel & Lodging Association(AHLA). Urban markets are in worst shape, with most still in a “depression cycle.”

The overall U.S. hotel industry remains in a “recession,” according to AHLA’s report citing STR data. The difficulty for urban markets is that they depend substantially on business from events and group meetings. Room revenue was down 52 percent in May compared to May 2019. New York City, for example, is still in a  depression with nearly 200 hotels in the city closed due to the pandemic, taking with them 42,030 rooms, one-third of the city’s supplies.

Leisure travel is currently driving the recovery, but business and group travel, the industry’s largest source of revenue, will take longer to recover. Current forecasts show that segment returning to 2019 levels in 2023 or 2024. Several major events, conventions and business meetings have already been canceled or postponed until at least 2022.

AHLA said the dire situation means the industry needs targeted relief from Congress.

“While some industries are starting to rebound as COVID-19 restrictions ease across the country, the U.S. hotel industry is still in a recession, with the hardest hit markets in a depression,” said Chip Rogers, president and CEO of AHLA. “While many other hard-hit industries have received targeted federal relief, the hotel industry has not. We need Congress to pass the bipartisan Save Hotel Jobs Act so hotels in the hardest hit regions, especially urban markets, can retain and rehire employees until travel demand, especially business travel, comes back to pre-pandemic levels.”

Hotels are the only segment of the hospitality and leisure industry yet to receive direct aid, AHLA said. The association and hospitality workers’ labor union UNITE HERE are urging Congress to pass the Save Hotel Jobs Act. The legislation, introduced by Democrat Sen. Brian Schatz of Hawaii) and Rep. Charlie Crist of Florida, would allow hoteliers to select payroll expenses from a three-month period from 2019 to calculate the maximum grant amount they would receive, up to $20 million.

To qualify, the hotel must show a 40 percent loss over a three-month period of the owner’s choosing in 2020, or if the hotel was not in operation for a three-month period last year.

“The difference between this and PPP is, one, it’s totally a grant, and two, it’s available for all hotels,” Rogers said previously. “It’s not just small hotels, it’s not those under 500. It’s not just based on your ownership category. If you’re a public company, private company, or REIT, it doesn’t matter, you will qualify for this as long as you meet the 40 percent threshold.”