Sad time for hotel owners
One part of the economy that’s obviously been hit hard by the coronavirus and its related disease, COVID-19, has been the hotel/ motel industry. With non-essential travel to Mexico shut down since last spring, the hotel industry along the border has had it particularly rough since so much of its trade came from south of the border. Add to that, the kibosh on large entertainment venues that used to draw some from out of town, the numbers only look more bleak.
The job of putting heads in beds has become nearly impossible, according to Best Western’s CEO, David Kong.
“This situation we’re in now, it’s not sustainable. It’s really bad,” he said, in a story published Oct. 12 at cnbc.com. According to that same story, the American Hotel & Lodging estimates that 38,000 of the nation’s 57,000 hotels will close within six months without further government assistance.
Across the state, comparing September 2020 to September 2019, the hotel/motel occupancy rate is down 36.9 percent. We’re working on getting the number for Hidalgo County.
The Best Western CEO said in the same interview that not only has the downturn in travel caused his business harm, but so has the pandemic, leaving him with people who are afraid to use hotels no matter how often they’re told that the rooms are immaculate and germ free, and so are the hallways and lobby. On top of that, when people do travel, more are using Airbnb, a vacation rental online company based in San Francisco, which rents relatively flawless stand-alone homes to people at a decent price. The amenities are available based on one’s budget. Want a home near Houston with a big pool out back and a barbeque pit out back? No problem.
Meanwhile, hotel owners like Best Western’s Kong worry that unless another round of rescue funding arrives soon, the future looks very dark indeed: “It’s really hard to say when a recovery is going to be. This situation we are in now, it’s not sustainable. It’s really bad. As soon as people use up all their savings and reserves, they’re going to default on their loans. And then what?”
Indeed, then what?
People who have lived in Hidalgo County for, say, three or four decades, can remember the days when a relatively big city like McAllen only had a handful of hotels, mostly located on S. 10 th . There was the Sheraton, the Hilton. Then, a few more were built along the expressway (Embassy Suites, circa 1983, etc.); but the big push came circa 2010 when the McAllen Convention center really started to kick into gear. Now, if one looks at it sitting along the expressway, there are large hotels encircling it. Same thing goes for the area in Pharr around the Nolana/ Hwy. 281 intersection.
Some remember the difficulty many faced during the Great Recession of 2008/2009. If some were having it rough back then, how are they faring now? The pandemic makes the Recession look almost like a blip on the radar in comparison.
Obviously, it’s not only the hotel owners who are having a hard time. Pity the poor people now out of work – desk clerks, restaurant staff, maids. In fact, according to that same CNBC story, the hospitality sector across the U.S. saw 9.1 million layoffs from March to August. The unemployment rate in that sector skyrocketed to 39.3 percent last month (September 2020). Some have been called back, but the hotel sector’s jobless rate still sits at 19 percent vs. the national rate of 7.9 percent (Source: CNBC).
All of which means that guys like Best Western’s David Kong are hoping for a new federal stimulus/rescue package to ensure that more hotels don’t shut down.
“The job situation is just absolutely horrible. You’re talking about people that worked 25-30 years in our industry who are laid off,” Kong told CNBC. “There’s no safety net, no insurance. Hotels are the heart and soul of any community, and hotels are small businesses. These are hard-working people trying to make an honest living.”