New York Hotels Take Major Hit With Travel Shut Down in U.S.

(Bloomberg) -- New York’s hotel industry is getting hammered.

With social-distancing measures keeping travelers at home, hotel occupancy plunged to 17% in New York City, the epicenter of the coronavirus outbreak in the U.S. The rates were similar in Boston and San Francisco, two other cities hit hard by the outbreak.

Overall, occupancy rates plummeted to 30% across the U.S. last week, according to lodging data firm STR. The numbers are worse than what the industry saw during the financial crisis and in the aftermath of the 9/11 terrorist attacks, according to Jan Freitag, STR’s vice president of lodging insights.

“Seven of 10 rooms were empty around the country,” he said. “That average is staggering, but it’s together to process when you consider occupancy will likely fall further.”

Hotel companies including Marriott International Inc. and Hyatt Hotels Corp. are in the process of furloughing corporate employees, and one industry group is predicting that 1 million hotel workers will lose their jobs in the weeks ahead.

Hopes for a federal stimulus package boosted hotel stocks on Wednesday, along with airlines and cruise operators.

Dozens of hotels in New York City have closed, including the New York Hilton, the Four Seasons and the Baccarat Hotel, according to websites for the Midtown properties. Owners are seeking relief from lenders and tax collectors, said Vijay Dandapani, chief executive officer of the Hotel Association of New York City.

While banks have expressed willingness to work with commercial borrowers, the city’s Department of Finance has told the trade group it is unable to defer property taxes, Dandapani said.

“Payment due dates for property taxes are set forth by the City Charter, and the agency does not have the legal authority to change those dates,” the Department of Finance said in a statement.

Dandapani is also asking the city to adjust the amount of taxes due to reflect lower revenue during the first half of 2020.

“New York hotels have no cash flow,” said Dandapani. “They’re not going to have money to pay.”

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