Fiscal Stimulus Packages Offer Aid to Beleaguered Hospitality Sector; Public Health Crisis Temporarily Reduces Demand for Hotel Rooms
Public health crisis has substantially impacted the hospitality industry; some demand drivers remain present. Since February 15, hotel occupancy has fallen from 63.6 percent to 21.6 percent for the week ended April 4, pulling average RevPAR down 80.6 percent. The drop in demand is most severe for higher chain-scale establishments while economy, extended-stay, and interstate-adjacent hotels have fared slightly better. Some rooms are still being used by healthcare professionals and individuals supporting supply chains. Others are electing to use hotel rooms to self-isolate or for personal travel.
Fiscal aid package offers potential respite to troubled sector. Many hotels have temporarily reduced or suspended operations and downsized staffs. Between mid-February and mid-March, total accommodation employment declined by nearly 29,000 positions, the largest single-month fall since October 2001, immediately following the events of 9/11. Total sector job losses from that shock reached 91,000 while about 142,000 roles were temporarily removed during the Great Recession. Hospitality job losses during this current health crisis may surpass that figure as the pandemic disproportionately affects the lodging industry. There is relief on the horizon, however. The largest fiscal stimulus package ever issued by the U.S. is on its way and will inject about $2 trillion into the economy through a variety of programs, helping individuals and businesses weather the short-term costs of the COVID-19 outbreak.