- Government officials across the country are converting thousands of empty hotel rooms intohousing for coronavirus patients and first responders.
- It provides some much needed revenue for an industry that's been brought to its knees by the COVID-19 outbreak.
- Chicago is spending at least $2 million per month to lease two full hotels.
Cash-strapped and empty hotels across the country are finding ways to keep the lights on by converting themselves into coronavirus wards or temporary housing for the National Guard or exhausted doctors and nurses.
It provides some much needed revenue for an industry that's been brought to its knees by the COVID-19 outbreak that's spread to more than 1.4 million people in nearly every country across the globe. World, national, state and local leaders have imposed various travel restrictions, shuttered tourist attractions, issued broad shelter-in-place orders and even authorized hefty fines for people who don't adhere to social distancing rules.
The financial toll for hotels is worse than during the 2008 financial crisis, according to industry executives and analysts. Up to 4 million hotel employees, from desk clerks to maintenance workers, already have been laid off or soon will be, according to the American Hotel and Lodging Association, the industry's largest trade group. The group, the U.S. Travel Association and hotel CEOs met with President Donald Trump and other White House officials on March 17 to lobby for $150 billion in federal aid to help cover some of the devastating economic impact of the pandemic.
Hotels big and small are looking for ways to survive the unprecedented economic fallout, with some finding financial relief in government partnerships housing frontline medical workers and military personnel.
Chicago was among the first cities to seal the deal on such a partnership. Mayor Lori Lightfoot announced last month that the city began to rent out 200 "underutilized" rooms from Hotel One Sixty-Six to provide a space for infected patients and those awaiting test results who want a space to quarantine.
Last week, Lightfoot said the city is leasing The Hotel Essex in Chicago's South Loop to provide housing for first responders, including health workers and emergency medical technicians.
"Our healthcare professionals and first responders have been working around the clock and putting their lives on the line to tackle this crisis and keep our city safe," Lightfoot said in a statement. "Just as they've been supporting us, we need to support them. I want to thank our hotel partners for stepping up once again for Chicago during our hour of need.
Lightfoot previously estimated that the city will pay roughly $1 million to each hotel to lease all of their rooms for a month.
The money is the "bare minimum just to break even," said Michael Jacobson, CEO and president of the Illinois Hotel and Lodging Association. He said Illinois hotels have laid off tens of thousands of employees due to the coronavirus pandemic.
"By no means is a hotel making money off of this. The rates that they're negotiating are deeply discounted," Jacobson said. "It is a way to keep some of our hotel employees employed," adding that such deals are unlikely to keep the full staff working.
Imprint Hospitality, which owns nine properties across Virginia, Maryland, Colorado and New Mexico, rented out a number of rooms at its Salida Inn & Monarch Suites in Salida, Colorado to house National Guard members, according to managing partner Alex Walterspiel. She says the National Guard was called to the county to assist local health officials with mass COVID-19 testing amid a burgeoning outbreak across the state.
Walterspiel says all of Imprint's hotels have remained open as essential businesses, but just 5% of their rooms were rented in March, compared with a usual occupancy rate of around 80%. Of the company's roughly 200 employees, 185 have been furloughed, she said.
"We're trying to strike a balance of being supportive of the needs of the people that are coming in while at the same time being able to charge enough that we can bring our housekeepers in and pay for them to come in," she said. "This is not the time that we're going to profit from anything. This is the time where we have to just charge enough in order for us to be able to keep our doors open."
Walterspiel said she is actively seeking more partnerships with officials in other communities where Imprint has a property.
The American Hotel and Lodging Association, which represents Hilton, Marriott, Hyatt, Choice Hotels and others, is seeking out similar partnerships all over the country. Troy Flanagan, senior vice president of state and local government affairs for the association, says he's in touch with city and state officials, as well as federal agencies like the Department of Homeland Security, to connect them with hotels that can support the COVID-19 response efforts.
"Now is a time I think when businesses across the country are looking for nontraditional ways of trying to keep the lights on," Flanagan said. "Our members are coming together with local and state officials to meet their housing needs."
Unite Here, which represents 300,000 North American workers across a variety of industries including lodging, supports such partnerships. The union cautioned that the safety of workers needs to be prioritized.
"Workers need strong protections, now more than ever," Unite Here spokeswoman Meghan Cohorst said. "Unite Here is working with numerous cities to make sure that our industry steps up to do its part, but all possible steps are taken to limit risk to hotel workers."
In California, officials have rented two hotels near Oakland airport for homeless people to quarantine, and is pushing to get 51,000 hotel rooms across the state, Gov. Gavin Newsom announced. Los Angeles announced March 20 that it's renting out the Sheraton Fairplex hotel in Pomona to provide temporary housing for people ordered to isolate or quarantine due to exposure to COVID-19.
San Francisco officials are in talks to rent up to 6,500 hotel rooms for patients with mild symptoms and first responders, according to Kevin Carroll, executive director of the Hotel Council of San Francisco. The city is paying up to $213 per day to house and feed patients isolating in hotel rooms, according to the San Francisco Chronicle, and that rate drops to $164 per day to house first responders. If the room sits empty, the city will still pay $79 a day to hold the room, the Chronicle reported.
"It will hopefully be a win-win situation where the hotels can stay open, and in some cases they can bring employees into work and then it's helping a city need as well," Carroll said. "The hotels are coming in with rates to work with the city."
New York Mayor Bill de Blasio said April 1 the city has leased 20 hotels to add 10,000 beds for both first responders who want temporary housing while they interact with COVID-19 patients and to increase the hospital capacity in the city. De Blasio said the leasing of more hotels will be "key" to the city's COVID-19 response efforts.
"I'm very, very sorry what the hotel industry has been through in this crisis. A lot of people have been put in a tough, tough situation to work in our hotels. They're obviously struggling," de Blasio said at a news briefing. "But what it has meant at the same time is a huge number of hotels have become available to the city of New York and we literally can go in and lease an entire hotel building and we can do that dozens and dozens and dozens of times until we get to the point that we have all the beds we need."
Last month, officials from the U.S. Army Corps of Engineers said they are working with Gov. Cuomo and officials in 12 other states to refit facilities like hotels and college dormitories as emergency hospitals and treatment centers.
"These hotels are empty. The people don't have jobs," Lt. Gen. Todd Semonite, chief of engineers and commanding general of the U.S. Army Corps of Engineers, said at a news briefing. "We would go in and cut a contract to be able to have the state set up a lease with that particular facility, and we would then take the building over."
In Baltimore, Gov. Larry Hogan said the Baltimore Convention Center and neighboring Hilton Hotel will be used as temporary field hospitals amid warnings of hospital bed shortages.
Greektown Casino-Hotel in downtown Detroit is offering free rooms to first responders, including police, firefighters and EMTs.
"Greektown Casino has stepped up and offered free hotel rooms for our first responders who had family members at home that they did not want to go home to and potentially infect," Detroit Mayor Mike Duggan said Tuesday.
In the city of Kent, outside of Seattle, local officials rushed to buy a run down EconoLodge for $4 million in early March to convert the motel into a quarantine site. But the decision didn't go over well with everyone in King County, which has been hit particularly hard. Kent Mayor Dana Ralph at the time directed the city attorney to file a restraining order against the county to halt work on the quarantine motel, but it was later denied, according to local news reports.
These kinds of partnerships with cities, towns and federal agencies are something of a saving grace for the 95% of hotels across the country that are owned by small businesses and individuals, Raymond James analyst Bill Crow said. He said hotels around the world will be hurting for the next few months at least, but these initiatives help get some cash moving and employees working.
"They've got beds. They've got dining facilities or kitchens. They've got the ability to take care of folks," he said. "What we would love to be able to do is fill these hotels get the variable costs covered, feel like we're doing a good thing for the city and for the country and then emerge and live to fight another day."