Tomlinson: Texas hotel and travel industry taking new blows from COVID

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1of6Blanca Renderos cleans a common area at the Hilton. Faced with a historic downturn due to the coronavirus, hotels nationwide are changing the most basic ways they run their business to show would-be travelers they understand where they’re at: terrified.Photo: ALYSSA SCHUKAR, STR / NYT 2of6The Hilton Americas- Houston can be seen behind Discovery Green downtown.Photo: Richard Cummins, Contributor, Contributor / Getty Images/Lonely Planet Image 3of6The Sam Houston Hotel, photographed Tuesday, Aug. 4, 2020, in downtown Houston.Photo: Jon Shapley, Houston Chronicle / Staff photographer 4of6Presidian Hotels & Resorts is turning the DoubleTree by Hilton San Antonio Airport hotel into Estancia del Norte, which will be affiliated with the Tapestry Collection by Hilton brand.Photo: Courtesy of Presidian Hotels & Resorts 5of6A lone person walks near the Henry B. Gonzalez Convention Center. Canceled conventions and hotel bookings are straining Visit San Antonio, which recently cut its budget by 30% and furloughed half its staff. The agency is focusing on convincing organizers to postpone rather than cancel events, but it is unclear what those conferences will look in the future. Many attendees may opt to stay stay home and watch live-streamed panels, and planners may have to rethink networking, registration and spacing.Photo: Kin Man Hui, San Antonio Express-News / Staff photographer 6of6The RiverWalk near the Henry B. Gonzalez Convention Center are devoid of any pedestrian traffic. Canceled conventions and hotel bookings are straining Visit San Antonio, which recently cut its budget by 30% and furloughed half its staff. The agency is focusing on convincing organizers to postpone rather than cancel events, but it is unclear what those conferences will look in the future. Many attendees may opt to stay stay home and watch live-streamed panels, and planners may have to rethink networking, registration and spacing.Photo: Kin Man Hui, San Antonio Express-News / Staff photographer

The hotel industry and its employees are in big trouble.

Four of 10 hotel workers still are out of work, the American Hotel & Lodging Association reports. Two-thirds of hotels are operating at less than 50 percent capacity, far below what is necessary to pay their banks and investors back.

Texas is especially suffering, with a 64 percent drop in revenues during the second quarter of 2020, according to my colleague Randy Diamond. The occupancy rate in San Antonio was 31.6 percent, while Houston managed 36.8 percent, hospitality consultancy Source Strategies calculated.

“This is the biggest revenue drop we have ever seen, more than three times what we saw at the worst part of the Great Recession in 2009,” said Paul Vaughn, senior vice president of Source Strategies.

TOMLINSON’S TAKE: Vigilance required to keep COVID cases going down and economy going up

Labor Day offers no respite. Only 16 percent of Americans say they will travel this long weekend, and only 14 percent of hotel rooms are booked, the American Hotel & Lodging Association found.

Conditions are unlikely to improve until there is a coronavirus vaccine. Only 38 percent of Americans plan any overnight travel before the end of the year, an association poll found.

“We are incredibly worried about the fall and what the drop in demand will mean for the industry and the millions of employees we have been unable to bring back,” association president Chip Rogers said. “The job loss will be devastating to our industry, our communities and the overall American economy.”

Empty beds lead to empty tables. The National Restaurant Association says the industry lost $131 billion between March and June. A brief comeback in May and June was quashed when COVID-19 cases spiked in July, leading people to stay home.

The same dynamic is triggering airline layoffs. Federal assistance required companies to keep employees on the payroll until October, but with travel showing no sign of recovery, jobs soon will disappear.

American Airlines has released a plan to furlough 17,500 workers and layoff 1,500. United is considering 36,000 layoffs; Spirit could let go another 3,000. Delta will eliminate 2,000 jobs in addition to 17,000 early retirements. Southwest has negotiated extended time off or early retirement with 17,000 employees.

The shockwaves reverberate down supply chains. Boeing negotiated voluntary buyouts with 7,000 workers in May and started a second-round of buyouts last month. Slower assembly lines in the Seattle area will mean job losses at Boeing’s suppliers across the country.

Keep these trends in mind when the Bureau of Labor Statistics employment report comes out Friday. Analysts think the United States probably added 1 million jobs in August, but that does not constitute an economic recovery.

A million Americans made first-time claims for unemployment insurance just two weeks ago, the Labor Department reported. More than 14 million still are receiving benefits. The Coronavirus Recession is still ruining lives.

Congress returns next week, and the immediate question is whether House Democrats and President Donald Trump will negotiate additional economic aid or let the chips fall where they may.

Trump may pretend the pandemic has passed and urge people to resume work, studies and travel. And local leaders could lift limits on hotel and restaurant occupancy and reschedule conventions and festivals. But that does not mean people will show up.

TOMLINSON’S TAKE: 5 months of COVID failure with 10 months to go

Most Americans remain worried about catching the virus and are staying home, avoiding enclosed public spaces and practicing good hygiene. We are limiting our time in the grocery store and only meeting small groups of people outdoors at a distance. Few are in the mood to party.

The coronavirus has sickened more than 6 million Americans and killed 180,000. A new series from the Wall Street Journal reveals how playing politics worsened the toll — not just one party’s politics, but a slew of shortsighted decisions made over decades.

Consumers are not going to pick up the slack, which leaves policymakers to decide what happens next. Trump and Congress either can hammer out a new aid package to help the unemployed buy food and pay rent, or they can politicize the crisis ahead of the election and continue making poor decisions.

I’ve said before that we must do better, and in this case, I mean better politics. COVID-19 is killing our friends and family because we are too busy getting angry at our neighbors over political affiliations.

Americans should not forget this is a democracy and we are in charge. Do not allow politicians to manipulate you by stoking the anger and fear that favors them. We should be demanding unity and resolve and firing those who put party over country.

Tomlinson writes commentary about business, economics and policy.

twitter.com/cltomlinson

chris.tomlinson@chron.com

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