Hotels Suffering More Than Most During COVID-19 Pandemic

May 5, 2020
Originally published on May 4, 2020 5:43 pm

Hotels and hospitality are one of the hardest-hit industries by COVID-19.

Michael Jacobson, President and CEO of the Illinois Hotel and Lodging Association, said the scale of the crisis is unprecedented.

"We've never been in a situation like we are right now. Again, we can use 9/11, we can use 2008 as some sort of guidance, but nothing compares to what we've faced in recent weeks," Jacobson said, alluding to major downturns in travel and hotel stays following the 2001 terrorist attacks and 2008 recession. Jacobson said the current crisis is worse than both combined.

Jacobson said 130,000 Illinois hotel workers were laid off or furloughed in the last six weeks. More than 830,000 Illinoisans have claimed unemployment in the last eight weeks.

Peoria Area Convention and Visitor's Bureau CEO J.D. Dalfonso said Central Illinois isn't immune. About 5,000 people in the Peoria area work in the hospitality industry.

"Jobs, jobs, jobs are supported here locally through our hospitality industry. Through various statistics, we know about a third of layoffs right now, I think, come from the hospitality industry. I think that paints a fairly broad picture of the impact the economy has on hospitality and vice versa," he said.

Dalfonso said the Peoria area generates $656 million a year in travel-related spending. That translates to $60 million in tax revenues for local governments. Many cities, including Peoria, are currently weighing drastic borrowing or cuts to make up for revenue shortfalls caused by the coronavirus crisis.

The downtown Peoria Marriott hotel closed in March as the stay-at-home order began and room occupancy counts plummeted. The Four Points By Sheraton currently has 150 rooms on reserve for alternative housing for those impacted by COVID-19. Peoria County is picking up the tab on those rooms, with promised reimbursement from the Federal Emergency Management Agency.

Jacobson said there's a "dim" light at the end of the tunnel with talks of phased reopening mentioned recently by the governor. Hotels are already beefing up sanitation measures in anticipation of a gradual recovery.

"We know that consumer confidence is going to be the most important thing to regenerate when it comes to convincing people to travel, but what we want to be careful of is that we're in close consultation with a lot of state officials as to what reopening and recovering looks like," he said.

Some of those measures may include biosprayers currently used to sanitize in hospitals, or UV lights capable of killing viruses. Jacobson predicts the costs of these new measures will be baked into hotel room prices.

Smaller areas like Peoria may be better poised for a quicker recovery.

"Areas that have the rich history that Peoria does, and have the ability to drag in not only locals, but people that are willing to drive 30, 60, 90 minutes," he said. "Because I think it's going to take longer for travelers to convince themselves that it's safe to get on an airplane for four, or six, or even more hours."

He said cities like Chicago, which rely more on international travelers and large conventions to fill hotel rooms, will likely see a more sluggish recovery of their hospitality sectors.

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