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Hotel industry hits bottom, expects long climb back

Ross Norton //July 20, 2020//

Hotel industry hits bottom, expects long climb back

Ross Norton //July 20, 2020//

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The pandemic has not slowed construction of the new AC hotel downtown but Auro hotels has not decided what opening plans will be. (Photo/Ross Norton)

If there is a silver lining to the bleak days facing the hotel industry, it’s that Americans have a deep desire to be on the move.

Kirby Smith, vice president of sales and marketing for Greenville-based Auro Hotels, said the American psyche is one that says, “I want to get on the road.”

Through a pandemic that the industry says has been economically nine times worse for hotels than the period following 9-11, there are abundant examples suggesting that people will return to travel with enthusiasm when COVID-19 cases are under control.

Smith said the rate of people making same-day plans to stay at a hotel near home is the highest it’s ever been for the company, which owns hotel properties all over the country, including several in both Greenville and Charleston.

“It’s surprising,” he said. “They literally book that day. If the weather is nice, they make plans and they’ll book the same day. There are still couples and families that want to get out; I think they’re feeling pent up.”

It’s been good for that slice of the hotel industry’s customer base. The problem is, that slice is a small one.

“I’m not suggesting it’s all well,” Smith said. “We have a long way to go.”

According to the American Hotel and Lodging Association, the travel and leisure industry had lost 7.7 million jobs by April as a result of the pandemic, leaving hotel operators in a fight for survival. Eight in 10 hotels have laid off or furloughed employees, and the association projects 2020 to be the worst on record for hotel occupancy. The association is appealing to Congress for more stimulus relief.

The large slices of the hotel customer base include business travelers and those who travel for events — anything from a professional convention to sports tournaments.

“Where we’re seeing the biggest challenge is in the corporate group segment,” Smith said. The event travelers are trying to make something happen these days as they grapple with decisions on whether to reschedule or cancel until next year. But the business travelers who have been grounded by corporate policy don’t see a greenlight in the foreseeable future. “Corporate is very soft right now. Corporate America is going to take care of their people first. Some are still traveling but most don’t want to put their associates on the road for fear of COVID-19.”

For that segment, Smith said the level of bookings for 2021 is promising. Still, a turn-around is expected to be a long and steady climb, especially since an end to the pandemic and its economic damage is feeling more elusive.

“This is more sustained than 9-11,” Smith said. “We don’t expect to see normal (bookings) until 2022. It’s definitely picked up. Occupancies are coming back. They’re not where we want them to be, but I feel optimism.”

He said construction on Auro’s new AC Hotel at Camperdown in Greenville has continued unabated and remains on schedule, although plans for opening the 197-room hotel are undetermined. Auro’s other hotels in the Upstate include the Hyatt Regency in downtown Greenville, and Residence Inn and Springhill Suites — dual hotels under one roof, which opened in early 2019 on Washington Street.

In Charleston, the occupancy numbers have been surprisingly strong, Smith said. Auro properties in the Lowcountry include the Charleston Marriott, the North Charleston Marriott, Courtyard by Marriott Charleston Waterfront, a Residence Inn and Spring Hill Suites downtown and Townplace Suites near the airport. Hotel occupancy in the area was climbing toward 100% but dropped off some during the first week of July as COVID-19 cases surged.

“Charleston leisure transient has been surprising to me,” Smith said. “Occupancies are much stronger than one might anticipate in Charleston. It has slowed down a little bit this week (the week of July 1) but Charleston was close to having a lot of sellout hotels.”

According to a survey by the American Hotel and Lodging Association, 89% of hotel operators in May said they were dealing with a significant downturn: 35% calling it dramatic, 33% categorizing it as severe and 21% moderate.  Like Auro hotels, the association predicts a recovery period in 2021 and a return to 2019 revenue and occupancy rates in 2022. Resort hotels and business/luxury hotels are faring worst, according to the association.

Smith maintains that he sees reason for optimism. He sees it in the eagerness of staff and guests to make the adjustments necessary to protect one another and get out there anyway.

“The general theme is that people want to get back to normal as soon as possible and normal is to get on the road,” Smith said. “The American psyche is ‘I want to hit the road.’”

This story originally appeared in the July 13, 2020, print edition of the GSA Business Report