Table of Contents
Topline
The American hotel industry could be on the brink of collapse with as much as two-thirds of the nation’s hotels set to shutter in six months without financial help from the government and millions of industry workers laid off, a situation CEO of Best Western Hotels David Kong told CNBC on Monday was “not sustainable.”
Opened door of hotel room with key in the lock
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Key Facts
Hotels have been the victim of a devastating one-two punch from the coronavirus pandemic, with forced closures leading to massive layoffs, and a sharp decline in bookings with travelers afraid checking in might mean contracting the virus.
“It’s really hard to say when a recovery is going to be. This situation we are in now, it’s not sustainable. It’s really bad,” Kong, who recently spoke with both the White House and Congressional Democrats about stimulus funding, told CNBC.
Kong noted the severity of the industry’s cash flow problem, saying “you can only do so much with eliminating expenses and cutting people, you still need revenue,” which is difficult with less people willing or able to travel and hotels slashing prices in a bid to fill rooms.
Without government help, over 38,000 of the nation’s almost 58,000 hotels could be forced to shut down in six months, according to a recent report by the American Hotel and Lodging Association.
If Congress doesn’t extend PPP loans or expand Main street loans, the AHLA estimates over 3,700,000 jobs related to the hotel industry could be lost, according to the report.
Key Background
The battle on Capitol Hill and in the White House for a new coronavirus stimulus package has been long, complicated, and as the days and months grow longer since the CARES Act was passed, baffling. Republicans and Democrats can’t find common ground, and it seems almost daily President Donald Trump is alternately pulling the plug on stimulus talks or advocating for a bigger and bigger package. The airline industry cadged $32 billion in payroll support in the CARES Act and is pushing hard for a reup, but other parts of the travel industry like hotels haven’t been able to get support on Capitol Hill. House Majority Leader Nancy Pelosi (D-Calif.) has said she won’t support a stimulus plan that’s less than $2.2 trillion, and Republicans hit a ceiling at around $1 trillion, though their latest plan included only $300 billion in new spending. Meanwhile, Trump, who blew up stimulus talks between Pelosi and Treasury Secretary Steve Mnuchin shortly after being released from Walter Reed hospital, on Friday claimed to want a greater stimulus package than both Republicans and Democrats.
Big Number
33%. That’s how many Americans say they’ve traveled for pleasure since March, according to the AHLA, and only 38% say they may travel by the end of the year.
Key Quote
“It’s time for Congress to put politics aside and prioritize American workers in the hardest-hit industries. Hotels are cornerstones of the communities they serve, building strong local economies and supporting millions of jobs. Thousands of hotels across America are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come. Chip Rogers, president and CEO of the AHLA.