OCEAN CITY — As federal officials continue to butt heads over another COVID-19 stimulus package, the hospitality industry nationally, and even locally to some degree, continue to wither on the vine with hundreds of small business closures likely along with thousands of employee layoffs.
For weeks, the Democratic-led House and the Republican-led Senate, with the Trump administration in the middle, have been negotiating a second COVID-19 stimulus package. While progress has been made in recent days and Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi continue to negotiate, there continues to be a divide on certain key issues.
For one thing, the Democrats’ stimulus plan includes an influx of $2.2 trillion, which is a compromise of sorts from the $3 trillion initially proposed, while the Republicans are pushing a package closer to $1 trillion. A sticking point seems to be the amount of federal relief funding for state and local governments, along with concerns about certain pork-fed inclusions not directly related to COVID.
The good news is both sides agree on certain pillars of a relief plan including the extension of the $600 federal unemployment supplement, another round of $1,200 direct stimulus payments to eligible citizens and Payroll Protection Program (PPP) payments and other relief to eligible small businesses. However, while some progress has been made, it remains uncertain if a new stimulus package will be approved before the election next month or even by the end of the year.
Both sides acknowledge a robust stimulus package with relief to individuals, families and small businesses is needed, but each appear to be reluctant to give each other a potential tipping point for next month’s election. Meanwhile, the small business community, nationally and locally, including the hardest-hit travel and hospitality industries anxiously await relief. The American Hotel and Lodging Association (AHLA) last week released the results of a survey predicting a dire number of hotel closures and additional job losses in the hospitality industry if relief does not come soon. The survey includes a break down by state.
According to the AHLA survey, there were 31,100 direct hotel jobs in Maryland pre-COVID, but 11,800 of those have been lost already by September. The survey predicts the figure could swell to 21,700 if federal relief is not coming soon. In terms of hotel-related jobs lost, Maryland had 103,799 jobs pre-COVID and that figure has been reduced by nearly 24,000 by September. The survey predicts that number could swell to nearly 47,000 if no federal relief package is coming soon.
Perhaps the direst statistics in the AHLA survey are the potential hotel closures. Maryland had 729 hotels statewide prior to COVID. The survey predicts 357 could face foreclosure without federal assistance, and 488 could close in general if a stimulus package is not in the offing. The AHLA released a statement along with the state-by-state survey results.
“AHLA released a new survey last week that underscores the devastating results for the hotel industry,” the statement reads. “… 74% of hotels would be forced to lay off additional employees and two-thirds, or 67%, would not make it another six months if Congress fails to pass another COVID stimulus bill.”
The AHLA statement urges federal leaders to get a stimulus package done sooner rather than later or the consequences could be dire for the hospitality industry.
“It’s time for Congress to put politics aside and prioritize American workers in the hardest-hit industries,” the statement reads. “Hotels are cornerstones of the communities they serve, building strong local economies and supporting millions of jobs. Thousands of hotels across America are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come.”
The AHLA statement points out both chambers are close to ending their current sessions and it could be difficult to get a deal done before that happens. However, House and Senate leaders have said their members could be called back if a compromise is reached. Trump himself is anxious for both sides to reach an agreement, tweeting from the hospital this week “Our great USA wants and needs stimulus. Work together and get it done. Thanks.”
The AHLA statement echoes the president’s sentiments.
“It is imperative that Congress act now before leaving town, or thousands of small businesses and the jobs associated with them will be lost,” the statement reads “The American people cannot wait for relief. Congress needs to act now.”
Closer To Home
It’s no secret the local hospitality industry took a hit this spring and summer because of COVID and has still not fully recovered. According to statistics provided by the Ocean City Hotel-Motel-Restaurant Association (OCHMRA), many local lodging establishments took double-digit hits on the bottom line this season.
On the one hand, Ocean City is somewhat insulated from the dire statistics presented in the AHLA survey, largely because of the seasonal nature of the resort. On the other hand, most resort businesses rely on the 100 days of peak summer season and a good chunk of that was lost this summer because of COVID. Even as things loosened up somewhat through the summer months, some resort businesses have still not recovered.
“The statistics put out by the American Hotel and Lodging Association are quite alarming,” said OCHMRA Executive Director Susan Jones this week. “Leisure and hospitality have been the hardest hit industries as travel in many places came to a screeching halt.”
Jones did say Ocean City benefited from being within a days’ drive from much of the densely-populated eastern half of the country. In addition, Ocean City offers the beach and many other outdoor recreation amenities, providing a level of comfort for many visitors still leery of COVID.
“Ocean City has fared better than some as we are within driving distance of so many metro areas,” she said. “Additionally, we have lots of outdoor and wide-open spaces for relaxation, so overall we survived summer as many felt comfortable being outdoors.”
That does not mean the town was insulated from the devastating effect of the coronavirus. Monthly statistics provided by the OCHMRA this week on occupancy rates and average room rates, for example, paint the grim picture for many.
“That being said, net profits were down in double digits and way more for some,” said Jones. “Properties that have more group business have been hit harder than those catering to the more leisure and transient visitor. In terms of occupancy, March was down 44%, April was down 51%, May was down 59% …”
A deeper dive into the statistics bares the trend out. Occupancy rates in Ocean City in June were at 67%, down from 75% in the same month in 2019. The average daily room rate in June in 2020 was $177, down from $200 in 2019, while the revenue per available room in June was $113, down from $150 in 2020.
In July, the average occupancy rate in 2020 was 72%, down from 86% in 2019. The average daily rate in July was fairly close at $250 in 2020, compared to $255 in 2019, while the average revenue per room in July 2020 was $180, compared to $218 in 2019.
In August, the occupancy rate in 2020 was 69%, down from 88% in 2019. The average daily rate was $222 in August 2020 compared to $257 in 2019. The average revenue per room in August was a $153 in 2020, compared to $224 in 2019.
