Thousands of hoteliers have jumped at the opportunity to offer underutilized properties to the government, but the measure is almost certainly not enough to offset coronavirus business losses.
Coronavirus fears have shut down hotels around the world, but some operators are able to keep at least a few lights on due to healthcare demand.
With business and leisure travel depleted, many U.S. hoteliers are positioning their largely vacant properties for healthcare or social service functions. The American Hotel & Lodging Association launched the Hospitality for Hope Initiative March 24 to connect hotels with local healthcare providers and governments. About 15,000 properties have already registered with the program, according to the AHLA.
“There are a lot of parties at the table, and one of the biggest challenges is any deal has to happen in essentially no time,” said PKF Hotelexperts Managing Director Channing Henry.
Social distancing measures to combat the spread of coronavirus have kept travelers at home. Revenue per available room, the hotel industry’s key performance metric, is expected to drop nearly 51 percent this year in the U.S., according to hotel data firm STR. But the same self-isolation measures keeping travelers from checking in could also provide some hoteliers with a limited stream of revenue.
Hospitals across the country are running at or well over max capacity, so underutilized hotels could be a relief valve with much-needed rooms. But it isn’t clear how much emergency services can prop up the hotel industry through tough times.
The AHLA provides the list of participating properties to the U.S. Department of Health and Human Services to connect hoteliers with local authorities. Hotels in the database are then used for a variety of needs, including housing medical staff, first responders, or hospital patients not suffering from coronavirus. Some hotels are also being used as quarantine facilities.
Chicago officials struck a deal with five hotels to provide 2,000 rooms for residents with mild cases of coronavirus to self-isolate while they recover. Chicago Mayor Lori Lightfoot estimated the measure would cost $1 million per hotel for a 30-day block of rooms.
As of March 25, seven out of every 10 U.S. hotel rooms were empty and U.S. hotels had lost $5 billion in room revenue since mid-February, according to the AHLA. The trade group anticipates the U.S. hotel industry is on track to lose $3.5 billion weekly, as the coronavirus downturn gets worse.
It is unlikely the Hospitality for Hope Initiative will buoy the entire U.S. industry through coronavirus, but some hoteliers are getting compensated for offering their properties to emergency services. Government agencies like the Federal Emergency Management Agency are the leaseholder in most cases, according to PKF. While it is still early to get an overall sense of how much hoteliers stand to make in such a deal or how many employees are retained, the AHLA is also providing a lease template for hoteliers to use with government agencies.
“From what we’ve been hearing out there, nobody wants to do what happens in times of hurricanes, where hotels are a source of refuge, but they price gouge,” Henry said. “This is the opposite of that, is very property specific, and comes from a collaborative space.”
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Photo credit: Chicago leaders have reserved 2,000 hotel rooms for residents with mild cases of coronavirus to self-isolate. vladc77 / Pixabay