Coronavirus impact

Texas hotel industry forecasted to lose 64,000 jobs due to COVID-19

Texas hotel industry forecasted to lose 64,000 jobs due to COVID-19

The Driskill Hotel
The Driskill has already closed temporarily.  Photo courtesy of The Driskill Hotel

Texas faces the coronavirus-provoked loss of 40 percent of the jobs that are directly and indirectly tied to the hotel industry, a new forecast indicates.

The forecast, released by the American Hotel & Lodging Association, envisions the loss of 268,797 jobs across the hotel industry and the industries that support hotels. That’s out of a combined 658,637 jobs in those sectors.

In the hotel industry alone, the study predicts the loss of 64,072 out of 145,617 jobs in Texas, or 44 percent. 

Chip Rogers, president and CEO of the American Hotel & Lodging Association, says in a March 17 release that the COVID-19 crisis represents the biggest single decline in travel in modern times — worse than the post-9/11 era and the Great Recession.

The association says hotel occupancy rates in some U.S. markets — including Austin, Boston, San Francisco, and Seattle — have dropped below 20 percent, forcing some properties to shut down at least temporarily. In Austin, at least two hotels, The Driskill and the JW Marriott Austin, are closed indefinitely.

“We had to make an extremely difficult decision to temporarily suspend hotel operations at the JW Marriott Austin — for a minimum of two weeks — to manage the pandemic’s effect on business and group travel. Our priority — above all else — is to protect the people that work for us, and the people that stay in our hotels and eat in our restaurants,” Mike Banas, director of communications and corporate affairs at White Lodging Services Inc., says in a statement.

Merrillville, Indiana-based White Lodging owns and operates the JW Marriott Austin. Banas says the JW Marriott’s temporary shutdown began March 23.

In a fact sheet provided by the American Hotel & Lodging Association, Chris Carr, a finance executive at Dallas-based Ashford Hospitality Trust Inc., says the management team has deferred bonuses and all employees have deferred pay raises to save money. The company is weighing other cost-cutting measures, including a reduction in leased office space.

“Unfortunately, it is unclear if I or my associates will have a job in the coming months,” Carr says, “as our share price has plummeted and yet our vendors are demanding payment, as they are in a similarly poor situation.”

On March 23, Ashford’s stock was trading at less than $1 a share, compared with nearly $4.70 a share in early March 2019. 

Based on the number of hotel rooms, Ashford’s biggest U.S. markets are Washington, D.C.; New York City; Los Angeles; San Francisco; and Dallas-Fort Worth. In DFW, its properties include the Hilton Fort Worth and the Marriott DFW Airport. In all, the company owned 117 U.S. hotels with 24,942 rooms at the end of 2019.

Paul Vaughn, senior vice president of San Antonio-based hotel consulting firm Source Strategies Inc., says the coronavirus pandemic presents a unique and uncertain scenario for Texas’ hotel industry. The industry, he says, has entered “unprecedented territory.”

“In previous major events, like after the 9/11 attacks or during the Great Recession, people were still traveling and using hotels and other ancillary services, including restaurants, bars, and transportation. With the current situation, an extended period of self-quarantine means that people are not traveling to the typical gatherings that the lodging industry relies upon,” Vaughn tells CultureMap. “We expect to see an extended depression of the industry that could last through the end of the year or longer.”

While some Texas hotels will lay off staff and otherwise tighten their budgets to stay in business, he says, others that already weren’t performing well will end up closing entirely.

“If life can get back to normal within the next month or two, businesses may recover quickly enough for the summer tourist season,” Vaughn says. “But at this point, that seems like an overly optimistic forecast.”