Hotels Suffered 'More Than Restaurants' During COVID Shutdowns, Still Trying To Recover
The hotel industry took a beating last year when shutdowns brought travel plans to a halt. Travel is rebounding this summer as cooped-up Americans get vaccinated and out of the house. Lynn Minges is the president and CEO of the North Carolina Restaurant and Lodging Association. She joins WFAE "Morning Edition" host Marshall Terry as part of our series Rebuilding Charlotte to give us a sense of how hotels are doing this summer.
Marshall Terry: Welcome.
Lynn Minges: Thank you so much, Marshall. Glad to be with you.
Terry: Well, let's start by going back to last year, first. I'm guessing the early part of the pandemic, when the shutdown came, was the worst for hotels. How bad was it in North Carolina?
Minges: Well, it was pretty bad, but it's interesting that I think a lot of folks were focused on the pandemic and the impact it was having on their personal lives. We also were very focused on restaurants that were required to shutter entirely for indoor dining. And so they were closed. And I think there was not nearly as much focus on hotels.
It's interesting that hotels were never closed at any point during the pandemic. In fact, many of them housed relief workers and vaccination sites and medical workers who were coming into our state. They were never closed, but they were, in fact, significantly impacted. They really have felt the brunt of the pandemic and have largely suffered — if it's even possible — more than restaurants. That's kind of the unknown, underlying story that really hasn't been told. So I appreciate you sharing that and covering this, this morning.
Terry: Well, do you have a sense of the loss in terms of jobs or hotels that shut down permanently?
Minges: Well, we know that — I don't know about permanently — but we know that when the pandemic first happened in March of 2020, when it first hit, we had about 510,000 North Carolinians working in the hospitality sector. So that would include restaurants and hotels. And then, you know, immediately, by about April, we only had about 288,000. So literally, we laid off half our workforce. Those were across restaurants and hotels, but significant impact.
If you think about from a hotel standpoint, meetings and conventions were canceled. It was illegal to have more than 10 people in a hotel ballroom, which was just unheard of, something we would have never imagined because, you know, those hotel meeting spaces stay busy and booked, pre-COVID. All of that stopped and so the business stopped. And when the business stopped, these business owners and operators had no choice but to lay off employees.
So we found ourselves, you know, really working with about half our workforce. There were hotels that had maybe five employees left at a facility. And those are hotels that, you know, maybe employed 100-200 people, depending on the scale.
It's been tough, but we are seeing them rebound. Business is coming back. We're still down in that sector — and this is restaurants and hotels — about 70,000 jobs. You know, if we weren't dealing with a worker shortage, we might be back to almost full capacity.
Terry: You said things are starting to rebound. When did hotels start seeing things turn around?
Minges: Well, it's been really interesting to track. I think sometimes we try to generalize when we talk about hotels or restaurants. And what we've seen is that it really depends on their location. So from a hotel perspective, those hotels that cater more to leisure travelers have done quite well. Hotel accommodations on the coast of North Carolina and in the mountain region have rebounded completely. In fact, they are full and in some cases turning away visitors, either because they don't have room capacity or they don't have workers to service the rooms and the guests. Those have really rebounded nicely, and did even in the middle of the pandemic. People were taking leisure vacations and certainly to places where they could drive.
Urban areas like Charlotte, like Raleigh, those urban areas, and particularly uptown Charlotte has really suffered perhaps the most during this pandemic. And that's largely because there was no business travel, essentially. Workers were working remotely. People weren't taking trips for business or otherwise. There were no meetings or conventions. There were no live sporting events that normally draw people into the cities and into hotels. There were no festivals or events. And so with all of that stopped, business going into hotels, particularly in urban centers, really, really suffered.
So we've seen that in Charlotte, unfortunately. But it is beginning to get better. It's going to take a while for that to rebound. These meetings and conventions of business travel don't just reappear. It's going to be a slow build back as many of these events are scheduled with a pretty long lead time.
Terry: What's the biggest challenge right now that you're hearing from your members at the lodging association — in particular when it comes to hotels?
Minges: You know, without question, the No. 1 challenge and concern I'm hearing across the board is workforce. We just don't have enough workers to fill the many jobs that we need to fill today. There are just a number of reasons for that, but largely from what I can tell and what I'm hearing from members, it is that the workers that we displaced back in April of 2020, they likely have gone on to other careers in other sectors that were hiring. Many of our workers left the industry. That's one of the biggest concerns we hear it. So they're now slowly trying to rebuild a workforce.
Terry: What are you telling them to do to go about doing that?
Minges: Oh, my goodness. They're doing all kinds of. They're hosting job fairs, we have a job board. We are aggressively recruiting. Many of those are offering signing bonuses and pay at rates this industry has never seen before. So for folks who are interested in entering the hospitality industry, there's never been a better time. Extremely high wages — or at least relative to what these employers were paying pre-pandemic.
But that also has the downside of, you know, increasing overhead costs, operating cost and hence, room rates. So it is an interesting paradigm, but wages are at an all-time high in our industry right now. So, it's a good time to find a job in the hospitality industry.
The other thing I just want to make sure to point out is that even when we see business began to rebound, I think it's important to note that many of these hotels have struggled now for 14, 15 months with no revenue coming in — and the bills have remained constant. The cost of running an operation has remained high, but there's been no revenue to offset that. So it's important to note that these businesses have taken on a significant amount of debt, and the recovery period for them is expected to be fairly protracted.
Terry: And when do you think the hotel industry will recover?
Minges: There're analysts who would say, you know, we're not going to really see a full healthy rebound until maybe 2024. It's going to take a while. But again, I think that depends on the nature of the hotel and their business model. If they're dependent on meeting and convention travel, it's going to be much slower. Or business transient travel — slower. But for leisure destinations, those who can attract leisure visitors, it's expected to come back more quickly.
Terry: Are there any changes that hotels made during the pandemic they'll keep in place after the pandemic is over?
Minges: I think there's just been a heightened awareness of sanitation safety measures that have been put in place during COVID. We're seeing many hotels doing contactless keys where the keys are sent to an app on the phone and those are used instead of handing out a key to a guest. We're seeing places where you can wash your hands in restaurants and other facilities so you don't have to touch the faucets to do that. We're seeing automatic door openers and those kinds of things, elevator buttons that can be manipulated without having to physically touch them.
So we're seeing a lot of evolution in those kinds of things. I think that will take hold and continue. You know, granted, some of these things were coming already, but I think COVID and the heightened awareness on sanitation has really expedited that.
Terry: Thank you for joining us.
Minges: Thank you so much, Marshall. Great to be with you.
Terry: Lynn Minges is the president and CEO of the North Carolina Restaurant and Lodging Association.