Canada’s hotel industry hammered by COVID-19

Hotels across the country are already closing and laying off thousands of workers due to the impact of the COVID-19 pandemic on business, according to the industry’s association.

“The hotel industry virtually crashed over the last ten days. In a period of 48 hours last week, occupancy dropped by 50 per cent across the industry,” says Susie Grynol, CEO of the Hotel Association of Canada.

“Today we’re sitting at under 10 per cent,, which is not enough to sustain business operations, so in the last two days, we’ve seen at least 100 hotel closures.”

One famous landmark hotel to suspend operations is Ottawa’s Chateau Laurier.

Practically all of the big brand names, including Marriott, Hilton and IHG have closed some Canadian locations as occupancy rates fell hard and fast with the pandemic.

Some of the hotels hanging on are near airports, says Grynol. “They’re housing distressed passengers who are trying to get home.”

What’s needed to save jobs and businesses

The Canadian Hotel Association believes the hotel industry needs to be high on the government’s list for financial help.

Laid-off workers will be able to access EI benefits, but there are concerns about how quickly the process will work. Grynol says the industry itself needs fast money with flexible terms if hotels are to survive the crisis.

“Right now we’re seeing, you know, some of the early liquidity that was announced through BDC, for example, the lines are jammed, and it’s difficult to get through.”

Globally the hotel industry has never faced a picture so grim.

Canada and the U.S. have agreed to stop all non-essential travel between countries, nearly freezing border crossings.

Several European countries are on total lockdown, as well as residents of several U.S.states including California, Illinois, and New York. Plus, the list of countries imposing travel restrictions around the world keeps growing.

It all adds up to trouble for tourism and business travel in Canada.

“By the time this is done, if things continue to progress as we suspect they might, we could see somewhere around 250,000 job losses,” says Grynol.

“And that’s not in two months from now. That’s in a few weeks from now.”

Behind the big brands: small businesses and workers

While the hotel business is one of global brands, in this country behind those corporate logos, 87 per cent of the industry is owned by small businesses.

Among those small businesses are also independent operations like Accent Inns and Hotel Zed of B.C..

Covering eight locations in all, the two small chains are owned by the Farmer family and employ 250 people.

CEO Mandy Farmer says bookings began slipping as early as January when COVID-19 emerged in China. In February, things got worse.

“And then, just in the last couple of weeks, we have seen an absolute stop to all business,” says Farmer.

While they still have some guests, the future’s a bleak picture.

“When I look forward on the books, when I look to April, May, June, there’s nothing. There’s no business.”

In the summer, she’s normally at 90 per cent occupancy.

“So that’s why this is also such a dire situation is because we’ve just come through winter. That’s when we usually use up our cash reserves. And now we’re heading into summer, which is when we plan to make money.”

Farmer has already started cutting staff, and cut her own salary in half.  Her family partners are taking no payment.

Farmer fears she’ll have to lay off up to 70 per cent of her employees.

Amanda Hazen was one of the first to be let go. She’d been working the front desk at the Accent Inn in Victoria for two years.

She’d already volunteered to go down to part-time hours to help the company.

Now she’s applying for EI.

Hazen is fortunate her husband has a stable job. Beyond losing her income, she’s more worried about people she loves getting sick.

“I don’t know what the world is going to look like tomorrow. It’s scary.”

This week Naden Abenes was laid off from downtown Vancouver’s Hyatt Regency.

A room attendant, she’d worked in the hotel’s housekeeping department for 12 years.

She says the almost 650-room hotel is at five per cent occupancy, which means there is only work for three or four cleaners.

With a normal guest count there could be more than 40 cleaners on the job.

A volunteer rep with Unite Here Local 40, a hotel workers union, Abenes says older workers who have seniority are afraid for their health if they stay at work. And everyone is worried about how to pay the bills.

“We are depending on the government and our employer to step up to help us,” says Abenes.

Worldwide damage

On Friday IHG announced it would reduce costs by $150 million to deal with the crisis, including cutting executive salaries, halting renovations and slashing marketing budgets.

The company, which owns the Crowne Plaza, Holiday Inn, Intercontinental, and Regency brands, operates more than 5,900 hotels worldwide. It expects revenue to drop by 60 per cent in March alone.

Earlier this week the world’s largest hotel chain, Marriott International, which has 7,300 properties and 1.4 million rooms around the world, predicted it would be temporarily laying off tens of thousands of staff members, from managers to housekeepers.

Marriott plans to maintain workers’ benefits, but in a candid video posted to Twitter, company CEO Arne Sorenson said business in most markets is down by 75 per cent or more.

He added the company is cutting all advertising, and that neither he nor Executive Chairman Bill Marriott Jr. will be taking any salary in 2020.

Numbers are not available for Canada yet, but the American Hotel and Lodging Association says U.S. properties are losing $1.4 billion US a week.

According to the New York Times, COVID-19 is also taking a big bite out of President Trump’s family businesses.

Farmer is looking for all levels of government to find a way to keep hotel operators from going under.

“I would love to see our property tax deferred. That is a huge hit that we pay. Provincially minimum wages start to go up in the summertime. That’s not going to help matters. So I’d love to see a pause on that one as well.” British Columbia is set to raise minimum wage.

Deferred payments on water and utility bills would also help cash flow, says Farmer.

“What we are doing is we are fighting to keep this company alive, so that we can welcome these temporarily laid off people back.

“Most importantly, I need the government to look after my team.”

CBC