Santa Cruz Sentinel
03/30/20

Coronavirus: Bay Area Hotel Layoffs Might Just Be Start of Job Losses
By George Avalos

Coronavirus: Bay area hotel layoffs might just be start of job losses

SAN MARTIN — At least 1,400 hotel workers in Northern California have lost jobs or been shoved into indefinite furloughs amid the coronavirus fallout, but these might be just a grim vanguard of further economic reductions.

Hotel worker layoffs in the Bay Area and nearby regions total at least 1,431, according to new estimates by state labor officials, but several experts warn that the newly announced cutbacks are merely the beginning of widespread economic devastation in California’s crucial lodging and travel sectors.

“This is only the start of the hotel layoffs,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market. “The majority of hotels in California and nationwide are reducing operations or closing temporarily.”

More than 400,000 jobs supported by the hotel sector or directly connected to hotel operations are expected to be cut in California, according to an Oxford Economics study released by the American Hotel & Lodging Association.

“Those numbers may be conservative,” Reay said.

Roughly 414,000 jobs, or a staggering 40.8 percent of the nearly 1.02 million jobs directly or indirectly associated with California’s hotel industry, are being eliminated due to the effects of the coronavirus, the hotel association and Oxford Economics study determined.

The reasons are simple yet brutal. Multiple states, including California, have issued orders to slash the operations of an array of non-essential businesses, including hotels, in a quest to corral the spread of the coronavirus. As a result, people simply have begun to shun hotel visits in growing numbers.

“Drastic declines in occupancy rates will lead to massive job losses for individuals across the industry,” the American Hotel & Lodging Association stated in its report.

Job cuts are being planned in at least five hotel complexes in Northern California, consisting of three in the Bay Area and two in Monterey County, according to several official filings with the state’s Employment Development Department.

“Hotel owners are already reporting facing massive, unavoidable layoffs and furloughs,” the hotel association stated.

Carmel Valley Ranch in Carmel chopped 600 jobs, Rosewood CordeValle hotel and resort in San Martin cut 263 positions, Ventana Big Sur in Big Sur reduced staffing by 216 jobs, Hotel RIU Plaza Fisherman’s Wharf in San Francisco cut 209 positions, and Las Alcobas Resort & Spa in the Napa County town of St. Helena cut 143 jobs, according to official notices filed with the state EDD.

“The vast majority of hotel employees are minimum wage employees,” Reay said. “These are people who really need those paychecks.”

Revenue per available room for hotels in the United States plunged 69.5 percent during the week of March 15 through March 21, according to a survey by Tennessee-based STR, which tracks an array of statistics, including trends in the hotel industry. Revenue per available room is the benchmark metric used to measure hotel financial trends.

“This is the steepest revenue per available room decline we’ve ever recorded in our 30-year history,” Jan Freitag, senior vice president of lodging insights with STR, said in a report posted with Hotel News Now.

STR predicted hotel revenues will plummet to a greater extent.

“We fully expect that this data could get even worse as travel into the U.S. and North America overall dwindles even further,” Freitag said.

And in an indicator of travel-related layoffs, Inflight Catering, which provides catering for commercial jetliners, is cutting 39 jobs in Brisbane.

“Seattle was hit first by hotel cutbacks, and then San Francisco,” Reay said. “The occupancy levels are in the low single-digits in San Francisco right now. San Jose, Palo Alto, those markets are falling as well.”

Experts warn that the hotel market might rebound in a sluggish fashion even when the economy is deemed ready to be re-opened.

“It could take two or three years for hotels to get back to being stabilized at the levels before the coronavirus occurred,” Reay said. “Even if the COVID-19 impact is over in 60 to 90 days, the hotel industry is pretty much done for this year.”