19 November 2020
Hotel Lawyer: Is the hotel industry on the verge of salvation, or precipice of despair?
We are less than a week from Thanksgiving and a lot of new data has been released in the past few days, with important implications for the hotel industry and the economy. Some highlights discussed below are:
- An American Hotel & Lodging Association survey taken November 10-13, 2020, provides a grim short-term forecast for the hotel industry, saying 71% report they can last only 6 months more, and 34% can last only 1 to 3 more months.
- A City National Bank (CNB) report provides a November 18 update that new COVID vaccines now claim 90% or higher effectiveness; they might become available in December and be widely available by spring 2021.
- The same CNB report projects short-term pain (rising COVID cases, deaths and hospitalizations) a decrease in consumer activity, and contraction for the economy (driven by COVID) – but projects a strong economic recovery starting with the second half of 2021.
- CNB Report warns that its projected recovery in for the economy and markets is “unconditionally dependent on [the COVID] vaccine ending the pandemic.”
The AHLA Survey
The American Hotel & Lodging Association (AHLA) issued a press release on November 19, 2020 with the results of a survey taken November 10-13, 2020 with 1,200 respondents. The survey indicates widespread hotel closures and failures unless there is significant federal economic relief to survive the devastating loss of travel and tourism.
- 71% of hotels report they will only be able to last 6 more months at current projected business, and 34% say they can last only 1 to 3 months longer.
- 82% of hotel owners say they cannot obtain additional debt relief from their lenders beyond the end of the year.
- 59% of hotels says they are in danger of foreclosure by their lenders due to COVID-19.
- 52% say they will close without additional federal assistance, and 98% would apply for and use another round of Payroll Protection Program (PPP) loans.