The local hotel industry is suffering business losses similar to the devastating levels hit during the Great Recession or following the Sept. 11 terrorist attacks in 2001, said the county’s top tourism official.
John Hutar, CEO of the San Mateo County/Silicon Valley Convention and Visitors Bureau, said the national hotel market plummeted by 32% in the second week of March.
An outsize portion of the harm was felt in the Bay Area, said Hutar, who predicted the limited travel spurred by coronavirus fears and subsequent stay-at-home orders will soon lead to occupancy rates in the single digits.
He framed the profound losses as “tremendously devastating,” for an industry vital to the health of the regional economy as well as many Peninsula cities where hotel tax revenue is an essential source of income.
For perspective, the 3,709 rooms spread throughout 12 hotels mostly lining the Bayshore in Burlingame generated $29.3 million during the 2019 fiscal year for the city’s budget, amounting to about 35% of the general fund income. When the economy was humming and tourism was vibrant, occupancy rates reached 87.7%. Similarly, hotel taxes generated about $17 million in South San Francisco over the previous fiscal year.
Hutar added the worst of the impact is likely yet to come, and that industry experts tracked similar trends in Italy and China for models of the mounting losses expected on the horizon.
Among the largest blows to the industry locally is the loss of bookings for international flight crews, said Hutar, who said airport hotels relied on the block room reservations as a dependable source of income. But as traffic at San Francisco International Airport plummets — to the tune of an 81% drop in passengers since last year — so grows the burden for hotels, said Hutar.
He balanced that perspective though by noting the degree to which local hotels will suffer is largely uncertain, due to the unique nature of the crisis causing the economic havoc.
“The immediate downward spiral this time is unprecedented; with shelter-in-place orders now going in place in other parts of the country, the situation will get worse before it gets better,” he said in an email. “The anxiety for hotel owners and operators is not knowing when we will reach the bottom.”
Questions over how long the travel industry will reel compounds the challenges, said Hutar, who noted that economic repercussions will likely linger in the aftermath of officials eventually lifting orders to stay at home.
Furthering that point, he wondered how long it would be before regular travel connections are made between the San Francisco Bay Area and New York City, as the two metropolitan centers grapple with their positions as epicenters of the virus on opposing coasts.
He said some hoteliers already started laying off hourly workers and personnel while some companies elected to suspend operations entirely.
Others have started conversations with state and regional officials regarding the opportunity to designate hotels as safe spaces for those who have been exposed to the virus and need to be isolated or monitored.
One such location was established in San Carlos at the Fairfield Inn where Grand Princess cruise ship passengers are sheltering, and more discussions are underway regarding additional sites in Burlingame.
The economic hardship is not limited to hotels, said Hutar, who added parallel industries such as rental car services, retail outlets and restaurants are feeling the pain too.
“It’s a tough and unprecedented situation for everyone,” he said.
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