Mark Hoplamazian, foreground, president and CEO of Hyatt Hotels Corp., speaks during a meeting Tuesday at the White House with President Trump, Vice President Pence and other hotel CEOs. The executives lobbied the president for $150 billion in aid in response to losses the hotel industry has suffered because of the new coronavirus pandemic. Also at the meeting was Chip Rogers, president and CEO of the American Hotel and Lodging Association, and Jon Bortz, CEO of Pebblebrook Trust and chairman of AHLA. (Photo: Kevin Dietsch | Bloomberg | Getty Images)
“We’ve got to keep people employed. If we don’t keep them employed, it’s even a bigger disaster on that end of it.” Nimesh Zaver, Insignia Hotel Management
Seemingly overnight, the new coronavirus pandemic has dramatically curbed travel in the U.S. Hotels are feeling the pain as occupancies dropped to historic lows, in some cases down by 80 percent.
On Tuesday, Johns Hopkins Center for Health Security reported the U.S. has more than 4,200 confirmed and presumptive cases of COVID-19 in 49 states and territories. This is more than double the more than 1,600 cases reported on Friday. Seventy-five people have died.
The American Hotel and Lodging Association on Monday said it expects the hotel industry will see the loss of nearly 4 million direct and indirect jobs as the travel and tourism industry shuts down. So far, major hotel managers said they’ve laid off or furloughed 1 million employees.
WATCH: Hotel CEOs and American Hotel and Lodging Association President and CEO Chip Rogers on Tuesday met with President Trump, Vice President Pence and other White House officials to discuss economic relief for hotels and other small businesses related to the travel and tourism industry in America.
Meanwhile, Louisiana hotelier Nimesh Zaver is trying to keep his hotels open and avoid cutting jobs.
Zaver is CEO of Insignia Hotel Management with a portfolio of eight branded properties in the Pelican State. Overall, he’s seen occupancy drop by 70 percent since the beginning of March. He is trying to avoid cutting jobs by giving employees tasks they don’t normally take on during a normal business day.
“We’ve got to keep people employed. If we don’t keep them employed, it’s even a bigger disaster on that end of it. We have to keep everyone busy.”
That’s his goal as long as the hotels remain open. But uncertainty reigns.
“We don’t know what the president is going to say,” he said. “We might be on a total shutdown; they might announce something that in the next day or so. Every day is a different day.
“As long as I can provide a job and give them paychecks, it’s something they can take home to buy groceries or whatever they need. That’s important to me.”
Experts in hotel labor management say this crisis will pass and hotel operators should do what they can to keep as much staff as possible onboard.
Del Ross, chief revenue officer of Hotel Effectiveness in Atlanta, said the first step hotel operators should take in deciding whether to temporarily furlough employees is to gauge how much business the hotel will generate in the coming weeks.
“They need to be really on top of their forecast,” he said. “They might end up have to update next week’s forecast twice or three times a week, depending on what’s going on.”
Hotels should “schedule to the forecast,” he said. “So many hotels today schedule to budget and our budgets are blown for the moment. Our budgets are meaningless right now.”
Operators who don’t staff according to the forecast will waste money through overstaffing shifts.
Another step is to create labor standards, such as how long it takes to clean a room. Using that information, a staff schedule can be made.
Staffing to forecast, creating labor standards and an employment schedule that combines it all will help hotels eliminate cost inefficiencies. Most importantly, the hotel will be staffed appropriately for the guests. “Which is huge,” Ross said.
At Zaver’s hotels, the managers are finding tasks for employees in areas where they don’t typically spend their days. For example, hot-breakfast buffets in some branded hotels have giving way to grab-and-go bags. That means the brand-mandated breakfast attendant spends a lot less time with the morning meal.
To fill up her hours, Zaver has asked her to focus on wiping down surfaces in the public space with disinfectant. He also has closed off some floors where she can do some deep cleaning. It might not be what she originally signed up for, but it’s keeping her employed and creating a safe environment for the guests and the staff.
As bad as it is and might get, there is light at the end of this tunnel. Hotels will need staff on hand when business returns, Ross said.
With that in mind, don’t cut ties with experienced employees.
Hotels in convention and meeting sectors are particularly feeling the strain. Ross advises owners be thoughtful about temporary layoffs and be upfront with employees about the situation. “Uncertainty is really dangerous right now, and you need to take it off the table.”
Employees probably expect to be laid off and if it happens, be sensitive about it. “These people are not at fault,” Ross said. “The industry will rebound and we will want those people back. We still have a labor shortage in our markets.” COVID-19 has not permanently filled the shallow labor pool.
When hotels reopen, managers will want to bring their experienced employees back to work. If managers poorly handle the layoff process, they risk losing the experienced workers to other hotels. Customer service will be negatively affected, and that’s something a hotel in revival does not need.
Debbie Brown, a human resources consultant in Seattle, Washington, has been in the field for more than 45 years, most of that spent with Four Seasons Hotels. She compared the current rate of job losses from the new coronavirus to those lost during the dawn of the Great Recession in 2008 and 2009. “That’s the last time we had to dramatically reduce labor,” she said. “It had a prolonged affect.”
READ: The American Hotel and Lodging Association on Tuesday issued a news release following a White House meeting among CEOs of major hotel companies, AHLA president and CEO Chip Rogers.
Some of what the industry experienced then is applicable to today, but most of it is not, Brown said. The new coronavirus outbreak is unprecedented in what it’s doing to the U.S. travel and tourism industry and the economy overall.
Brown advised that hotel operators need to enact policies that keep their business viable and enable them to “come out on the other end.”
“Establish protocol on which steps you will take.”
In many cases, companies have policies that give employees the choice to volunteer to give up hours, take a leave of absence or use the paid time off that they had accrued over the years.
But Brown said the COVID-19 crisis has reached beyond those options. Hotels have reached the labor-reduction phase.
Brown noted non-hourly workers such as managers cannot be forced to reduce their hours. “From a wage-and-hour standpoint, you cannot reduce exempt managers’ workday or workweek,” she said. “A manager can voluntarily reduce their workday or workweek but they cannot involuntarily be reduced. It would invalidate their exempt status. That makes that reduction a little more complicated.”
A graphic from a study released Tuesday by Oxford Economics and AHLA shows the possible impact the new coronavirus pandemic may have on the U.S. hotel industry.
She echoes Ross in advising hotel managers about the importance of communication with employees. “Business owners and operators will be remembered for how we managed this crisis. You’re making terribly difficult decisions that is very difficult for everyone involved and you just can’t lose sight of your values.”
Keeping lines of communication open and providing information, will make it easier for employees to file for unemployment benefits and other forms of supplemental care.
When it comes to communicating with employees, Judy King advises hotel owners and managers be courageous.
King is founder of Quality Management Services, an organizational development and training firm, in Franklin, Tennessee.
When it comes to communicating with employees, King advises hotel owners and managers be courageous.
“In this situation, being courageous is being willing to be vulnerable from the standpoint of, ‘Look, this is something I’ve never had to navigate before and I want to do this in a collaborative way.’”
Leaders are inclined to come across as having all the answers, but that frame of mind is lethal, King said. “Be willing to tell the truth, to be vulnerable and do so in such a way that it inspires confidence rather than fear.”
King and a client are working to set up communication networks to keep employees informed. The information can span what’s happening at the hotel business, but also locally and in the country. The information resources are vast but the information the business provides to employees should be carefully curated to apply to the company and the employees’ jobs, King said. “What is it that’s important for us, for our team, in this hotel?”
Where to find up-to-date information about COVID-19
AT A GLANCE
Here are some updates regarding the impact the new coronavirus outbreak in the U.S. Long Live Lodging will continue to update this chart as well as other information as part of its Special Report on Coronavirus and the U.S. Hotel Industry.
Commercial construction starts dramatically plummeted in April because of the coronavirus crisis, reports Dodge Data & Analytics. In May, commercial starts saw a slight uptick. Hotels under construction when the pandemic hit continue to move forward but contractors are challenged with the unexpected costs of providing workers with personal protection equipment and complying with OSHA’s newly minted health and safety standards. Hotel developers, meantime, are not in a hurry to see projects across the finish line as demand in travel remains low. Long Live Lodging reports about the state of hotel construction as part of our ongoing special report on the coronavirus crisis and its impact on the hotel industry.
In the first quarter of this year, more than 140 new hotels opened in the U.S., reported Lodging Econometrics. In March, the U.S. had 150,000 rooms under construction, said STR. It’s the highest end-of-month total the company has reported. Jan Freitag, senior vice president of lodging insights at STR, said he expects hotel construction to read more