Thousands Of Hotels Offer Rooms For COVID-19 Patients

Law360 (March 25, 2020, 10:47 PM EDT) -- Thousands of revenue-strapped U.S. hotels during the COVID-19 crisis are providing rooms to infected patients, people in need of quarantine and medical staff at nearby hospitals, as local governments scramble to find safe housing that will help prevent the spread of the novel coronavirus.

The American Hotel and Lodging Association said it is creating a national database with the help of the U.S. Department of Health and Human Services and the Army Corps of Engineers that matches hotels with nearby health care facilities. As of Wednesday, 8,500 hotel properties have added their names to the database, according to AHLA President and CEO Chip Rogers.

"We began talking with HHS on Friday night, and they said they saw significant demand for hotels to get involved for medical purposes due to the overflow of bed demand and people who need to be quarantined and not come into contact with those not in quarantine," Rogers told Law360.

Hotels in California and New York are already renting hotel rooms to those affected by the virus, Rogers said, noting that the AHLA is currently drafting a model lease for hotels to use with local governments. The rooms are paid for at a negotiated rate on a case-by-case basis between hotel owners and the governments depending on what is needed, he said.

Some hospitals want to take all space available at a hotel, blocking off rooms for anywhere from a week to three months, according to Rogers. Services requested include complete food-and-beverage offerings for hospital personnel who can't go home and back-of-the-house operations including laundry.

The AHLA program comes as hotels have seen huge job losses — about four million U.S. hotel employees, or 44% of the hotel workforce nationwide — as the coronavirus continues to spread, causing the worst hit to the industry in recent memory as business travel and tourism plummet.

But cities are now renting thousands of hotel rooms to accommodate COVID-19 patients and those potentially exposed to the virus to relieve local hospitals, according to Larry Eppley, leader of Sheppard Mullin Richter & Hampton LLP's hospitality team and office managing partner of the law firm's Chicago office.

"It's an interesting intersection of need and opportunity," Eppley said. "There's a tremendous need for beds for the same reason that so many hotel rooms are empty. Hotels can be a sanctuary for people who have tested positive and need to ride out two weeks in isolation. Or they can provide health care workers closer proximity to hospitals and stop them from infecting their families back home."

So far, Eppley has drafted contracts for three cities, including Chicago, with agreements that involve thousands of rooms.

On Monday, Chicago Mayor Lori Lightfoot announced that the city had reached agreements with local hotel operators to provide more than 1,000 hotel rooms for people who were exposed to COVID-19 or are mildly ill with the virus. These people could be immediately transferred to downtown hotels rented by the city, Lightfoot said.

"Individuals will complete their quarantine or isolation period in their hotel room, under monitoring by city staff led by the Chicago Department of Public Health," the mayor's office said in a statement.

Michael Roth, a partner in the real estate practice at Sheppard Mullin, said hotels offer "the perfect non-hospital setting" for people who need to be isolated. Rooms provide secure key card systems, living and working space and oftentimes food service with three meals a day, Roth said.

Roth said California Gov. Gavin Newsom also is on board with the idea of providing safe hotel spaces for people affected by the virus. The governor has given state and city officials the power to negotiate deals with hotels, and if a hotel refuses to make a deal, the state can step in and commandeer the facility "for reasonable compensation," Roth said.

Sheppard Mullin has prepared a checklist for hotel clients to consider when drafting contracts with health care facilities. Items to consider include separation of hotel staff from sick guests, union work rules regarding safety, access to hotel amenities, insurance certificates and rent deposits.

--Editing by Nicole Bleier.

For a reprint of this article, please contact reprints@law360.com.

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