Seven out of ten hotel rooms in the United States are empty, and the industry has lost nearly 4 million jobs and more than $21 billion in revenue. Where does the hospitality sector go from here?
The road to recovery is going to be a long one according to Hilton CEO Christopher Nassetta. “A full recovery will take time and it could take several years to return to the hotel demand levels we experienced in 2019,” he said in an earnings call last week. Hilton posted revenues of $1.9 billion in the first quarter, down 13% from last year, and net income fell to $18 million from $158 million. “COVID-19 has created challenges that our industry has never encountered before,” Nassetta added.
Other major hotel companies including Marriott, have noted the impact of shutdowns on their operations. “COVID-19 is having a more severe and sudden impact on our business than 9/11 and the 2009 financial crisis combined,” Marriott CEO Arne Sorenson told employees in a video. Business is running 75% below normal levels.
“This is by far the most significant crisis ever to impact our business. For a company that is 92 years old and has weathered the Great Depression, World War II and numerous natural disasters around the world, that is saying something,” Sorenson said in an earnings call. Revenue at the Bethesda, Maryland-based company dropped 7%, while net income fell by a whopping 91% compared with last year.
Accor, the largest hotel company in Europe, said revenue in the first quarter fell 15% and that nearly two thirds of its hotels are closed. “The world is facing an unprecedented health crisis that is having massive and unique impacts on the tourism industry,” noted Sébastien Bazin, Accor’s chairman and CEO.
Hotels are already planning changes in response to COVID-19 concerns. For now, many hotels are looking at China to get a sense of what reopening could look like. “We are seeing some early signs of lodging demand begin to return. If this holds, it may bode well for the course of this epidemic in other parts of the world,” Sorenson says.