By Paul Bubny

It isn’t exactly news that the hospitality sector has been among the industries most severely impacted by the shutdown of much of the economy to help contain the spread of COVID-19. However, the hotel industry experts assembled by Marcus & Millichap for the firm’s May 27 webcast on the current outlook spoke in terms of moving past the crisis rather than sounding the death knell for travel, whether for business or leisure.

That being said, the hotel sector is in a different place than, say, office or apartments, for the simple reason that while unoccupied office space may still be generating rent payments, an unoccupied hotel isn’t producing any revenue whatsoever. For that reason, the lodging sector wants to see more in terms of relief provided by legislative initiatives such as the Paycheck Protection Program.

“There needs to be more flexibility for us,” said Biran Patel, vice chairman of the AAHOA. “I don’t think the PPP covers what we need as far as the operational costs.”

Patel’s fellow panelists on the webcast—Greg Friedman, CEO of Peachtree Hotel Group and Simon Mendy, SVP of operations at Aimbridge Hospitality—concurred. “Candidly, we probably need 10 times what the program is providing from a liquidity perspective,” Friedman said.

The PPP does provide a Band-Aid, “but it’s a small Band-Aid,” said Friedman. The industry needs the government to backstop insurance companies “and have some of these business interruption claims paid out.”

At Aimbridge, which provides third-party asset and property management for more than 1,400 properties, “in the beginning we saw a lot of interest from our owners in applying for the PPP,” Mendy said. “As time went on and the government started adding more restrictions to the PPP, we saw more owners backing off. The ones that actually were given loans have decided to give them back in some cases.”

Asked by moderator Skyler Cooper, national director of Marcus & Millichap’s Hospitality Group, what hotel owners need to focus on to ensure that the sector continues down the road of recovery, Patel pointed to the need to focus on ensuring the safety and well-being of employees and guests.

“The hospitality industry has been focused since day one on cleanliness,” he said. “Now we just need to assure our guests that we’re going to provide the cleanest room possible.”

Friedman noted that the industry is “starting at zero from an occupancy perspective and building back up.” One lesson learned from the past, he said, is that “discounting rates does nothing for our industry.” Since everybody is in the same situation of rebuilding occupancy, “if we’re not careful, we could be starting from a very low point, rate-wise.”

Mendy stressed the importance of investing in the technology needed to support the post-pandemic guest experience, including keyless entry and mobile check-in. “At Aimbridge, we’re advising our owners to make sure our hotels are ready for the new norm,” he said.

With Cooper joined by his Marcus & Millichap colleague John Chang, the firm’s national director of research services, the webcast also looked at near-term and long-term travel trends, employment trends and challenges, the viability of independent brands—and whether the business community’s recent move to Zoom conferences meant a permanent shift away from live events. Replays of the webcast are available by clicking here.

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For comments, questions or concerns, please contact Paul Bubny