The upcoming fall and winter months are likely to expand the unemployment gap even further between the hotel industry and overall economy due to expected diminished leisure travel.
The U.S. added 1.4. million jobs in August, lowering the national unemployment rate to 8.4 percent, according to the Bureau of Labor Statistics.
While the monthly BLS report notes notable jobs gains in the leisure and hospitality sectors, the hotel industry isn’t exactly celebrating. Hotel unemployment remains at nearly 35 percent.
“The good news is the national unemployment rate dropped to 8.4 percent, and that’s fantastic, but the flip side is it paints a rosy picture when what we’re experiencing in our sector of the economy isn’t getting the attention it needs,” said American Hotel & Lodging Association CEO Chip Rogers.
The leisure and hospitality sector added 174,000 jobs in August, but roughly 75 percent of those gains went to bars and restaurants. Friday’s jobs report comes as the AHLA continues to lobby the U.S. Congress for another round of economic relief from the coronavirus pandemic, which decimated the hotel industry.
The unemployment numbers also arrived a week after MGM Resorts announced plans to lay off 18,000 U.S. employees.
Nearly two-thirds of U.S. hotels are operating at occupancy levels below what is needed for owners to meet debt obligations and financially break even, according to a report released earlier this week by the AHLA. Only 33 percent of Americans have taken an overnight vacation since March, and only 38 percent say they are likely to take one by the end of the year.
There is one positive way for hoteliers to view Friday’s report: Hotel unemployment is coming down from a nearly 49 percent high reached in April.
But it is the end of the traditional peak summer travel season, and business travel is highly unlikely to kick in enough in the fall to offset an expected reduction in leisure travel.
“Everyone is in a wait-and-see mood. There are some signs the summer travel season is going to last a bit longer due to their ability to work and go to school from anywhere,” Rogers said. “Hopefully that’s the one saving grace we have in 2020. Ultimately, this [positive hotel job growth] will come to an end because summer has to stop at some point.”
The BLS doesn’t break up hotel unemployment by types of hotels, but general industry consensus is that larger convention hotels in urban environments face a much longer recovery timeline than smaller properties.
“It’s a tale of two markets,” said Bruce Percelay, Mount Vernon Co. founder and chairman. “If you are in the right space, you will see a recovery, but, in the wrong segments of the hotel market, it’s got a long way to go.”
Percelay, the hotelier behind a variety of New England boutique properties like the Revolution Hotel in Boston and 21 Broad on Nantucket, thinks there is going to be further nuance to hotel unemployment numbers heading into fall. Recovery will be market-specific and product-type specific.
“You are going to see very high unemployment in the convention hotel business and a lot of the big box hotels,” Percelay added. “I think you will begin to see a faster recovery, we’re already experiencing it, in boutique hotels.”
But he doesn’t entirely discount the national unemployment numbers.
“A rising tide lifts all boats. If the economy as a whole improves, that can only be good news for the hotel business eventually,” Percelay said. “Without an improvement of the overall economy, there’s no hope for hotels.”
Photo credit: U.S. hotel unemployment remains out of step with the significantly lower national average. Pikist