Huge Hotel Job Losses Reported Due To COVID-19

By Joyce Hanson
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Law360 (March 23, 2020, 7:49 PM EDT) -- About 4 million U.S. hotel employees — 44 percent of the hotel workforce nationwide — are out of work or will be soon as the coronavirus continues to spread, in the worst hit on the hospitality industry in recent memory. 

A state-by-state data analysis of estimated job losses suggests the hotel industry faces an unprecedented drop in demand that will gain pace and get deeper and more severe week by week, said the American Hotel and Lodging Association, which conducted the analysis. The job losses affect employees in every U.S. state.

Three states hit hardest are California, with 125,454 hotel jobs lost out of a total of 285,122 in the state; Florida, with 88,631 jobs lost out of 201,433; and Nevada, with 85,130 jobs lost out of 161,404, according to the association's data.

In markets including Seattle, San Francisco, Austin and Boston, hotel occupancy rates have already dropped below 20%, while individual hotels as well as major operators have already shut down their operations, the AHLA reported.

With global travel restrictions and widespread business closures imposed to stem the spread of the virus, the U.S. Senate battled Monday over the terms of a $1.8 trillion dollar package aimed at reviving the economy as COVID-19 illnesses continue to rise. 

Chip Rogers, the AHLA's president and CEO, said the trade group is lobbying the White House and Congress to take immediate action to stem the hotel industry's catastrophic losses. AHLA representatives and top hotel CEOs have already met with President Donald Trump and congressional leaders to ask for assistance to keep hotels open and protect workers from job loss, the trade group said.

"The impact to our industry is already more severe than anything we've seen before, including September 11 and the great recession of 2008 combined," Rogers said in a statement. "The White House and Congress can take urgent action to protect countless jobs, provide relief to our dedicated and hardworking employees and ensure that our small business operators and franchise owners, who represent more than half of hotels in the country, can keep their doors open."

Clifford J. Risman, a Foley & Lardner LLP partner in Dallas who represents companies that develop, own, operate and finance hotels, told Law360 on Monday that revenue in the hotel industry can dry up overnight if every guest checks out. But while revenue can go away abruptly, fixed costs such as mortgage payments, taxes and insurance remain, Risman said.

"Frankly, none of the AHLA data surprises me," Risman said. "I suspect the expected job losses may not be light depending how long this continues. It's a mess, and there's no playbook. People are making this up as we go, and unfortunately, it will get worse before it gets better."

Lawyers who handle employment matters in the hotel industry can expect to keep busy over the weeks to come, Risman added, noting that he spent the weekend and much of Monday advising hotel clients on whether they should close, what kind of skeleton operations they might run and how to deal with staff reductions.

Another lawyer, Joshua D. Bernstein, co-chair of Akerman LLP's hospitality sector team in New York, told Law360 that his team has been fielding hundreds of calls from worried hotel clients in the U.S. and abroad, and said the AHLA's numbers correspond to what he's witnessing.

"Looking at the hotel occupancy figures and how they've taken a nosedive, I don't think the hotel industry has ever seen such a dramatic decline in occupancy," Bernstein said. "Nobody's traveling right now and some hotels are closing."

--Editing by Stephen Berg.

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