Hotel Occupancy Plunges 24% With U.S. Travel Shutting Down

(Bloomberg) -- The hotel industry is dealing with major fallout as the coronavirus outbreak keeps Americans at home.

Hotel occupancy in the U.S. fell 24% in the week that ended March 14 as travel shut down across the globe. Seattle and San Francisco were particularly hard hit, with occupancy rates dropping below 40%, according to data provided to clients by lodging analytics firm STR.

Marriott International Inc., the world’s largest hotel company, has begun suspending operations at some hotels and putting thousands of workers on furlough. Pebblebrook Hotel Trust has laid off 4,000 workers and is considering closing more than half of its properties.

In New York, where occupancy rates have dipped below 50%, there were signs of the damage on Wednesday. For once, the famous elevator lobbies at the Marriott Marquis weren’t crowded -- the property was mostly empty and security had restricted access to guests. T he New York Hilton, another workhorse Midtown hotel, was closed entirely.

Around the corner, the New York Sheraton Times Square was open, though the lobby Purell dispenser was empty. Workers wiped down surfaces while a handful of guests sipped coffee in the lobby.

The pall of an economic shutdown loomed over the hotel, said Gerard Dillon, a visitor from Melbourne, Australia, who was checking out of the property.

“It’s a sad situation,” he said.

Hospitality and travel executives, including from MGM Resorts International and the Walt Disney Co., visited the White House on Tuesday to seek federal aid. They’re asking for $250 billion in assistance, in part to cover lost wages for workers as hotels shut down.

“Within I would say just a few days, or maybe a week, we will probably be running 10 to 15% occupancy,” Hilton Worldwide Holdings Inc. Chief Executive Officer Christopher Nassetta told President Donald Trump during Tuesday’s meeting. “That’s everywhere in the world.”

All of this bad news has left hotel shares battered. Marriott’s stock has plummeted roughly 48% over the past month, while a Bloomberg index of real estate investment trusts that own hotels has declined 58%, outpacing the drop in the S&P 500.

“It’s going structurally change the way investors view the downside risk for hotels,” Michael Bellisario, an analyst at Robert W. Baird & Co, said in an interview.

The hotel industry alone could shed 1 million direct jobs in the coming weeks, the group told administration officials, and needs a $100 billion employee relief fund plus another $50 billion to help hotel owners meet expenses.

So far, casino companies like Wynn Resorts and MGM have continued to pay workers, said D. Taylor, president of hotel workers union Unite Here, during a call with reporters on Wednesday. In the hotel industry, “there have been massive layoffs and no company has stepped up,” Taylor said.

With the federal government considering sending $1,000 checks to Americans, Taylor said the money wouldn’t stretch very far in big U.S. cities and worried that workers would lose health insurance at the time they need it most.

“I’m worried that the American worker isn’t at the table, just industry,” he said.

©2020 Bloomberg L.P.