Hotel industry’s road to recovery is long and uneven: rpt
Yahoo Finance's Brian Sozzi breaks down what's next for the hotel industry's road to recovery.
Video Transcript
[MUSIC PLAYING]
- We talked earlier about the recovery in the airline business. Brian Sozzi got his eye this morning on the recovery in the hotel industry as well. Soz.
BRIAN SOZZI: Yeah, right Myles. Here, I am here with your daily dose of depressing data. In this, we're locking and loading on the hotel industry. And this data comes compliments of the American Hotel and Lodging Association looking at the outlook for hotel jobs. And they're saying 1 in 5 hotel jobs won't return by the end of 2021. So there you see 2021 here in this purple bar chart here.
By end of this year, the hotel industry is said to potentially employ-- directly employ 1.86 million people. OK, it's great that they have jobs. But look, look where it was pre-pandemic. 2.34 million jobs. So the Association Center is saying that 500,000 jobs or so will not return this year despite the recovery in the lodging industry.
Why is this happening? Of course, a lot of competition for labor out there. A lot of these workers may have taken retail jobs, construction jobs, you name it. They just don't want to work in hotels. And then also too, the Association coming out with occupancy. They're looking at the potential for occupancy to recover as the global economy recovers.
Occupancy is only supposed to come back to about 55.9% levels. Average annual levels of hotel occupancy still not good. In a perfect world, you want 100%. You want all of your hotels stocked out with human beings. But that is only supposed to be 55.9% in 2021. Again, still below pre-pandemic levels of 66% in 2019.
And then ultimately, occupancy lends itself to hotel room revenue. The Lodging Association is still looking. They're looking at about for $125.3 billion in room revenue this year. Up versus the depressed $85.5 billion last year. But again, still well below 2019 levels and 2018 levels.
And I think this is why you're still seeing a lot of the lodging stocks, a Marriott, a Hilton, a choice hotels trade a little cautiously. There is concern on if these hotels continue-- are able to continue their recovery this year and into next year.
Ultimately, you know, last week, I caught up with Marriott CEO. And we talked. Tony Capuano talked about the company's outlook for this year. But also can he get enough workers to just satisfy the demand they're seeing back in the hotels? Here's what he said.
TONY CAPUANO: Well, the good news is this is a brand that has a lot of passionate associates. So we were able to bring back many of our well-trained edition associates. But labor in markets where demand is accelerating rapidly is a bit of a challenge for us. So if you look at Florida, Texas, Arizona, California, the good news is there's lots of leisure demand in those markets. And we're seeing demand rise rapidly.
But we are competing with labor. We're competing with our traditional hotel competitors. And there are some industries that have thrived during the pandemic. And they need more workers as well.
BRIAN SOZZI: Have you had to raise wages?
TONY CAPUANO: In some markets, we have.
BRIAN SOZZI: There we were. We were sitting in a pretty large luxury Marriott hotel in New York City, almost 500 rooms. To me, it felt staffed. But the reality is-- and I don't want to, you know, bring a lot of bad news here.
But if you go to a hotel, you may just get a little bit less service than you're used to or you were used to pre-pandemic. Just because they don't have the bodies necessarily to take up the room-- to change over the room, put new sheets on the beds. This stuff is actually happening. But ultimately, it's just a sign of the times, Myles.
- Besides, you guys were in the penthouse suite at the Marriott, I believe, in Times Square. And as viewers of the program may remember, we had a long conversation about what the use of those rooms actually are. Usually for events like that. When LeBron comes to town to do media, he goes there. No one stays in those rooms.
BRIAN SOZZI: Well, I'm glad you mentioned that. Because he did say, for New Year's Eve, they tend to rent that room out for r a $100,000. So there's your socially shareable fun fact from Yahoo Finance today.
- And something else you mentioned. That the rooms are going to be serviced as much. And I don't know if you got into this with Anthony or not. But I do wonder, does Airbnb make the hotel chains life easier in a way? Because at an Airbnb, you don't expect that level of service.
At an Airbnb, you're like, I got to change my own sheets or I got to to make my own bed, right. I get one set of towels when I show up. And five days later, it's the same set. And what Airbnb does is they say, you could wash it if you like. There's a washer and dryer in unit perhaps. Does that make the hotel's life easier?
BRIAN SOZZI: No, let's be clear. If I go to a hotel, I'm not changing., , I'm not touching those sheets other than sleeping on them. I'm not touching hotel sheets. I'm not touching that bed. I'm not filling up my own toilet paper. That is why I'm paying $200 a pop to go to a hotel and have these things done for me. I'm not an Airbnb guy.
- Guys, I have to say one of my sort of pet post-pandemic peeves now is that if you do certain rentals, not even necessarily the Airbnb or whatever, they make you bring your own linens or pay for a linen service.
BRIAN SOZZI: I'm OK with that.
- I think the excuse now.
BRIAN SOZZI: That's great.
- I think the excuse now, I don't think so. They can provide the linens and wash the linens. I think the excuse now has become COVID-19. Oh, we can't handle the sheets because of COVID. What? Then wash the sheets. It's not a big deal. It's just a way of pushing that cost onto the customer rather than the rental doing it themselves.
BRIAN SOZZI: I want my own sheets.
- I will say, in some ways, though Julie, I mean, I remember back in the 90s going down the Jersey Shore with my family. And we had to bring our own sheets to the rental. And then Airbnb was like, no, no, no, rentals can now be, you know, a more upscale experience. So now, we're reverting back maybe to that time when every rental.
- Perhaps that's what it is.
- You know. But I mean we could do a whole bit on whether Airbnb actually reinvented the rental market or they just capitalized on something. Because rentals have existed for a long time certainly in vacation prone areas. But we'll table that. We'll table that for-- we're going to have slow Fridays, right, coming up in August as people are going on vacation. Maybe, we'll just, you know, yap about this for 12 minutes to kill some time at a later date.
