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‘You’re going to see thousands of hotels go out of business:’ AHLA CEO on need for immediate assistance

Yahoo Finance’s Alexis Christoforous and Chip Rogers, President and CEO of AHLA, discuss the COVID-19 impact on the hotel industry.

Video Transcript

ALEXIS CHRISTOFOROUS: With the arrival of the COVID-19 vaccine here in the US, there appears to be an end in sight to this pandemic, and with that, the promise of a much-needed vacation. For the first time since March, bookings at major hotel chains spiked on the same day Pfizer's vaccine was approved for use by the FDA. But my next guest says if the industry does not get immediate assistance from the government, 71% of hotels will not be able to stay open in the next six months.

Joining me now is Chip Rogers, president and CEO of the American Hotel and Lodging Association. Chip, that is a dire prediction. And you say every hour without aid is critical for this industry. What do you want to see? What do you need to see come out of the next stimulus package from lawmakers?

CHIP ROGERS: Well, first, thanks for having me. And you're right-- 400 jobs in our industry are lost every single hour since March. It is devastating news. You know, I kind of feel like we're in one of those action films where you're over a large hole in the ground, and you're at the end of a bridge, and you can see the other side, if you can just get to the other side. And that's what we need, is that rope to get to the other side. Because with the vaccine, with testing, with therapeutics that are working much, much better, just general scientific knowledge and how we're handling this, we can see that we can make it through this.

The problem is between now and when people start traveling again in late spring, early summer. If there's no assistance, you're going to see thousands and thousands of hotels go out of business, and those jobs will be lost for quite some time. So another round of PPP is absolutely necessary. It was a success, but it only lasted eight weeks back in March and April. And then some sort of low-interest loans, where hoteliers can service their debt and pay their property taxes. Those are two enormous expenses.

ALEXIS CHRISTOFOROUS: You know, another expense for these hotels is setting up their businesses and changing strategy for post the pandemic. What are you hearing from your members? How might the hotel experience be different for all of us in the months and years ahead?

CHIP ROGERS: There will be some things that are different. I mean, we may not have breakfast buffets for quite some time. We may not have in-room dining service for quite some time. We will have a much greater reliance on digital for checking and checking out, and any of the services that you need while you're there to stay. There may still continue to be a desire by many to wear a mask in public spaces for quite some time.

But I think from an industry standpoint, when we look at what's going to get us back to normalcy, it's going to have to be business travel. We talked about the spike, and that spike are people planning vacations. We love that. We need that. But vacations alone, leisure travel alone, does not make the hotel industry. You've got to have business travel.

And that's both a problem with the pandemic and a problem with economics. And some of these businesses feel like they can't afford to begin traveling again. And that's where we're going to have to see some change, some sort of stimulus package, to get people on the road.

ALEXIS CHRISTOFOROUS: But you know, Chip, I wonder if business travel is ever going to come back to its pre-pandemic levels, because we've learned a lot of things in the past 10 months, and one of them is many of us can do our jobs remotely. And so the need to fly someplace and then stay in a hotel to get the deal done doesn't necessarily have to happen. So if that's a permanent change in the way we look at business travel, how might the hotel industry have to adapt to that?

CHIP ROGERS: Well, one, I don't think that's a permanent change. I mean, on the margins, yes, but not a wholesale change. It reminds me of that great commercial United Airlines had so long ago, if you remember-- the CEO handing out the paper tickets, telling his salespeople to get back out on the road. We know human instinct is human instinct, and Zoom or anything else can't change that. A face-to-face meeting is always going to be better than a Zoom meeting. I hate to say it, but that's the reality.

And businesses understand that as well, so I think it will come back. On the margins, there will be some people who don't travel as much as they used to. What we would like to see in our industry, though, is that leisure type of guest that we started seeing in the last five years-- someone who travels for business, but takes advantage of, on the bookends of that business, being able to work remotely and go to a place that they would like to be and spend more time at. So, you know, we've seen bleisure happen over the summer for people that are working and enjoying those locations. We hope to see even more of that coming out of the pandemic.

ALEXIS CHRISTOFOROUS: I know a survey that you had conducted recently showed that nearly 2/3rds of Americans-- about 69%-- will not travel for Christmas. We know the CDC is recommending that people stay home or close to home and not congregate. Are we going to have to have a wave of consolidation in the hotel industry simply so that some of these hotels can survive?

CHIP ROGERS: Well, keep in mind that our industry is really built on small business owners. You see that name at the top, that corporate name that everybody knows-- the Hilton, the Hyatt, the Marriott and IHG Wyndham-- all those companies at the top of the hotel. But it's usually a small business owner that actually owns the hotel. And so even if you've had some of the brands begin to merge-- which we haven't seen any activity in that area, lately-- but even if that did happen, it doesn't really change the entire model, which is the franchise model, based on small business owners owning that local hotel.

ALEXIS CHRISTOFOROUS: All right. Well, we do hope you get what you need coming out of that stimulus package. Chip Rogers, president and CEO of the American Hotel and Lodging Association. Thanks for being with us.

CHIP ROGERS: Thank you so much.