In this video, Bill, Adam, & Laura discuss the impact of the COVID-19 outbreak on the hotel industry across the nation.
Laura: Today we’ll be talking about a topic that not too many people have talked about- Coronavirus, just kidding.
Bill: Dun dun duuun…
Laura: So we wanted to briefly touch upon how it’s been impacting some of our markets and then what we’re kind of doing on the surface side to mitigate some of those losses amongst our team. So first let’s talk about California, the bay area, specifically, because that’s where we have quite a few clients and we’re seeing some crazy numbers that we’ve never seen before.
Bill: California was hit first, and will be the most drastically affected. So we are seeing declines from about 30-50% in year over year from March. April, May, it’s probably a little early to see- we’re already seeing cancellations with major conventions but April, May is pretty much impossible to forecast at this point.
Laura: DFW- a market close to our hearts.
Bill: That’s where we’re based, so there we’re seeing more like 10-20% year over year declines. I’d mostly attribute this to it being a heavy airport market with some international mix. Florida, Adam has a couple of hotels in Miami.
Adam: It’s more dependent on where you’re at in Florida. So what we’re seeing is hotels located more near airports, cruise ports, and destinations on the beach are getting hit harder than hotels in tertiary, suburban markets or driving destinations. So anywhere from 20-35% depending on where you’re located is what we’re seeing.
Laura: We have quite a few hotels kind of mixed throughout the country, like the south, Alabama, I don’t know where else, I’m not very good at geography. We got some Tennessee hotels-
Bill: What is this, mid-Atlantic?
Laura: That’s not mid-Atlantic, that’s the South!
Bill: We have a lot of South.
Laura: We have a lot of hotels in the South, we’re definitely seeing declines, but obviously Corona hasn’t quite hit that area yet, so they’re not really as bad. I mean, some of our hotels are doing just as fine if not better year over year, I think it’s going to come- I mean, I don’t want to be a negative soothsayer, but that’s my prediction for when the virus spreads to those areas.
Bill: I think that the other major market that we have a lot of intel in is New York. That’s not quite as bad as the California Bay area, but-
Laura: And Florida, right?
Bill: But that’s probably going to fall anywhere between 15-25% declines in March, and then April and May who knows. Based on what we’re seeing across the country, the major markets that are getting hit: San Francisco, New York, Miami, what do those cities all have in common? We’ve basically come up with a Coronavirus RevGEN forecast algorithm. It’s composed of 3 components. The first thing is international travel. So, if you have a decent amount of exposure internationally, you can pretty much slash your year over year revenue by 15%, maybe even 20 if it’s heavy on apak. The other component is your exposure to airports, obviously that ties a little bit to international travel, but it’s also affecting a lot of domestic travel. So if you’re near an airport, I would slash another 10% off your forecast. And the third impact is conventions or large groups, and we’re saying anything over a 1000 guests. You can slash another 10% off your forecast. For example, San Francisco is the trifecta of all that, right. Big airport, big international exposure, specifically apak, and it’s a convention city. So, obviously if you add those three attributes, that’s where we’re getting our 30-50% decline year over year. That’s why if you’re in Tennessee, or suburban market, or even a lot of the Florida markets that are more driving destinations, you’re not near an airport, it’s pretty much domestic so it’s not international exposure, and people aren’t necessarily coming to your hotel for a large convention, that’s where you’ll probably be okay, depending on if this thing really becomes a pandemic. For now, I think you’re fairly well insulated.
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