Massive losses in revenue have bludgeoned the reeling hotel industry in the Bay Area and California, fresh evidence of the brutal effects of the coronavirus, according to grim new figures released Monday by a top lodging analyst.
The hotel markets in the San Jose-Santa Cruz and the San Francisco-San Mateo regions have been hammered during the months of coronavirus-linked business shutdowns, and the downturns in these Bay Area markets have turned out to be far worse than what’s going on in California, Atlas Hospitality reported Monday.
“This is as bad as we have ever seen it for the hotel industry,” said Alan Reay, president of Irvine-based Atlas Hospitality. “After 9/11, or even compared with 2009, we have never, ever seen it this bad.”
During the five most recent months — coinciding with extensive business shutdowns ordered by state and local government agencies to combat the coronavirus — revenue per available room, the most widely tracked barometer of the health of a hotel market, plummetted in California, the Santa Clara County-Santa Cruz County region, and the San Francisco-San Mateo County region, Atlas Hospitality reported.
The hotel markets in both the San Francisco-San Mateo regions and the Santa Clara County-Santa Cruz areas appear to be far weaker than is the case for all of California.
“When you look at the decline in revenue, it basically wipes out the finances of almost every hotel property,” Reay said.
In January 2020 compared to January 2019, hotel revenue per available room slipped 1 percent in California, 5.4 percent in San Francisco-San Mateo, and 6 percent in Santa Clara County-San Cruz County, according to information sent to this news organization by Atlas Hospitality.
However, during the five months from April through August and compared with the same five months in 2019, hotel revenue per available room fell by 65.5 percent in California, 82.6 percent in San Francisco-San Mateo, and 76.9 percent in San Jose-Santa Cruz, Atlas Hospitality reported. The five months in 2020 were all periods of business shutdowns and massive travel restrictions.
The hotel woes are also costing a growing number of workers in the sector their jobs.
Among the notable cutbacks recently affecting hotel and resort operations: Pebble Beach Co., which operates world-famous resort, lodging, restaurant, and golf facilities in Monterey County, recently revealed plans to lay off 500 workers, and warned of more job cuts to come of business conditions don’t improve.
Three operations were particularly hard hit in the Pebble Beach Co. layoffs: Inn at Spanish Bay is cutting 170 positions, Lodge at Pebble Beach is chopping 119 jobs, and Spa at Pebble Beach is reducing staffing by 77, according to an official filing with the state’s labor agency.
“We are concerned that the COVID-19 pandemic and the related economic downturn will continue to have a significant impact on our business for months to come,” David Heuck, Pebble Beach Co. chief administrative officer, wrote in a notice to the state government.
The sharp revenue declines could force a growing number of hotels to fail or simply decide not to open their doors again as hotels, even after government officials lift coronavirus restrictions.
“Some of these hotels will never reopen as hotels again,” Reay said. “They might become multi-family apartment properties.”
Even amid the massive uncertainties that face the lodging sector, one thing appears certain: The current level of revenue implosion for hotels is unsustainable, in Reay’s view.
“No hotel can withstand this sort of revenue decline,” Reay said.
