Hospitality Tops All Other Sectors For COVID-19 Job Losses

By Joyce Hanson
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Law360 (May 11, 2020, 8:29 PM EDT) -- April's U.S. employment report shows the hospitality and leisure industry got hit harder than any other American sector as the COVID-19 pandemic has forced business closures, posting a dramatic loss of more than 7.6 million jobs last month.

The Bureau of Labor Statistics report showed the sector has lost 47% of its total positions as COVID-19 sweeps the nation, suffering almost as many job losses as education and health services, professional and business services, retail trade and manufacturing put together, according to the American Hotel and Lodging Association.

"Losing nearly as many jobs as the next four sectors combined, the April jobs report shows the hospitality industry is truly engaged in a fight for survival," AHLA President and CEO Chip Rogers said in a statement. "The human toll is measured in millions of jobs lost, and nearly half of all hotels are functionally closed. We are doing everything we can to ensure those jobs aren't lost forever."

The damage so far to the industry includes a 75% layoff rate among hotel employees, with eight in 10 hotel rooms empty and nearly 50% of full-service hotels closed in the past two months, according to the AHLA. Industry experts predict the crisis will last into mid-2021, and hotels will struggle to reach their 2019 occupancy and revenue levels by 2022, the association said.

The AHLA is lobbying Congress to revise the federal government's Paycheck Protection Program so hotels and restaurants can use the small business loan program. Currently, less than 9% of all PPP loans have gone to such businesses, and they typically cover less than half their monthly costs, according to the association.

"Congress can help put the hotel industry on the road to recovery by expanding PPP to include other costs, increasing the maximum loan amount so hotels can cover costs to stay open and extending PPP beyond June 30," the AHLA said in a statement. "Given the current shelter-in-place orders and anticipated return of demand, it is highly unlikely travel will rebound by that date."

Overall, the United States lost 20.5 million payroll jobs in April, and the unemployment rate rose by 10.3 percentage points to 14.7%, according to the BLS. The U.S. Department of Labor agency attributed the sharp increase directly to the pandemic, saying the rate is the highest it's been and reflective of the largest over-the-month increase in the history of the numbers, dating back to January 1948.

"The numbers are not pretty," Cliff Risman, a Foley & Lardner LLP partner who co-chairs the law firm's hospitality and leisure industry team, told Law360 on Monday, saying the jobs data may even get worse before it gets better.

Dallas-based Risman said his hospitality clients that closed when President Donald Trump declared COVID-19 to be a national emergency are talking about how and when to reopen. Although Texas is in phase one of its reopening, Risman is not aware of any hotel in Dallas or elsewhere in the state that has reopened with anything but a skeleton staff and limited operations that serve as quarantine facilities or housing for first responders who have tested negative for the virus.

"In terms of hotel occupancy increasing, and putting furloughed or laid-off staff back to work, it's going to take a long time," Risman said. "The projections are that industry employment numbers will stay where they are or get worse before they get better."

He added that he has sat in on a work group with Rogers to make PPP loans easier for hospitality businesses to obtain, but progress has been limited.

--Editing by Stephen Berg.

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