HONOLULU (KHON2) — The American Hotel and Lodging Association’s (AHLA) State of the Industry report showed the hotel industry will continue to feel the adverse effects of COVID-19 well into 2021. It could be felt even longer in Hawaii.
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The report projects that half of the hotel rooms in the U.S. will remain empty in 2021; occupancy fell to 44% in 2020 and is projected to average 52.5% in 2021.
Occupancy is projected to be 41.5% in 2021 for Hawaii, compared to 37.5% in 2020, and 80.8% in 2019.
Hawaii was the most impacted state due to COVID-19, according to the report, and had the lowest occupancy in the country in December, 2020, at 24%.
“In this report, it’s very clear, it’s going to be a rough year, more than half of our hotels are going to remain empty, and a lot of people are still going to be waiting to get back to work,” explained Kekoa McClellan, AHLA Hawaii.
McClellan said, hotels need to be at 52% occupancy just to manage operating costs.
“Many of our hotels are struggling just to pay the electric bills right now,” he said.
The report showed hotel occupancy expected to be around 41% in 2021, which is just 4% higher than 2020.
Hotel revenues are expected to increase slightly in 2021, but only by $500 million from 2020.
“The reality is that until a vaccine is widely distributed, travel is not going to return to normal, and the entire Hawaii market will continue to lag our continental counterparts,” McClellan said.
The report indicates 56% of travelers want to travel in 2021 for leisure once a vaccine is distributed.
He said, low occupancy will have a huge impact on jobs until then.
“The harsh reality is that without some return to normalcy and trans-pacific travel, many hotels are contemplating permanent restructuring and some hotels are even contemplating permanent closure,” he continued.
The report shows hotels provided 44,000 jobs in Hawaii in 2019 and are forecasted to provide half that in 2021.
Outrigger hotels furloughed 80% of its staff and has only been able to bring back as much staff as occupancy will allow.
Outrigger Hotels Hawaii Executive Vice President said, they were at 30% to 40% occupancy over the holidays but have since noticed a decline due to changes in the state’s Safe Travels program.
“Our customers tell us that, you know, this just the rules are too confusing, they’re different on each island, and we need to simplify the protocol,” explained Sean Dee, who is also Chief Marketing Officer. “We have to keep Hawaii safe and healthy that is vital, it’s critical. For us, we want to keep our hosts [employees] healthy, we want the people that are arriving to be COVID negative, but Safe Travels works. We just need to get some consistency between the islands, so we can ramp up our occupancies and frankly, get people back to work.”
He said he, is optimistic about the vaccine and the slow increase in the number of travelers, but he said for Waikiki to get back to normal, international travel needs to re-open and thousands of visitors need to return daily.
“As of today, Canada, Oceania, and Japan are closed to Hawaii, and that’s having a huge impact on the numbers, the sooner we can roll out vaccines for the mainland it will be beneficial to the islands but specifically for Waikiki, we need the international markets to open up,” Dee said.
“To get occupancy into the 50% to 60% range to allow us to be profitable and to bring people back to work, you know, we probably need to see a 50% arrival return, and we’re not we’re not close to that,” he continued.
McClellan said, the COVID-19 recession has wiped out the last 10 years of job growth and the last five years of profits.
“We don’t anticipate returning to 2019 levels until 2024 at the earliest, which means that for the next four years, our properties will continue to struggle,” he said.