Coronavirus pushes once-bustling NYC hotels to the brink: ‘A complete washout’

Many of New York City’s biggest hotels closed their doors in March when the coronavirus wiped out tourism and business travel. The shutdowns were supposed to be temporary, but six months later, with no potential influx of visitors in sight, a wave of permanent closures has begun.

Sinking under the weight of overdue mortgage payments and property taxes, some hotels have already shut down for good, and many others are struggling to survive.

In the last two weeks, the 478-room Hilton Times Square and two Courtyard by Marriott hotels in Manhattan said they would not reopen, joining several others that had already closed for good, including the 399-room Omni Berkshire Place in midtown.

All told, more than 25,000 hotel employees have been out of work for more than six months, making the industry one of the hardest-hit in the city and emblematic of the challenges New York faces as it tries to recover from the economic crisis set off by the coronavirus outbreak.

Financial experts say they expect the pace of hotel failures to accelerate as lenders lose patience half a year into the pandemic.

“The fall is really in New York the strongest season of the year for hotels,” said Douglas Hercher, managing director of Robert Douglas, an investment banking firm that specialises in hotels. “It kicks off with the United Nations General Assembly, conventions, the holidays, the Rockettes. That whole season is basically going to be a wipeout.”

Vijay Dandapani, president of the Hotel Association of New York City, which represents 300 of the city’s hotels, was equally glum about the industry’s prospects.

“The year’s a washout,” he said in an interview. “It’s a complete washout.”

Mr Dandapani said in late summer as few as 7 per cent of the roughly 120,000 hotel rooms in the city were filled with traditional guests. The overall occupancy rate for the city’s hotels was close to 40 per cent, down from more than 80 per cent a year before, according to STR, which tracks the hotel industry.

When virtually all business and leisure travel screeched to a halt in March, hotels quickly laid off their workers and shut their doors. More than 30,000 unionised hotel workers were sent home.

Early on, the general expectation in the industry was that the lockdown imposed by the state would be eased far sooner and the closings would last only a few months.

Then, in late June, governor Andrew Cuomo announced that visitors from a list of states with high rates of infection would have to quarantine for 14 days upon arrival in New York. That list grew to include as many as 34 states, cutting off any real hope of domestic business, while international travel was essentially halted after the United States banned travellers from many parts of the world, including most of Europe, China and Brazil.

“This quarantine has really put the dagger to the throat,” Mr Dandapani said.

The quarantine, combined with the restrictions on public gatherings, left hotels with few customers to vie for. The US Open tennis tournament is the biggest sporting event of the year for hotels normally, Mr Dandapani said. But this year, with no fans in the stands, it filled just one hotel, the one where all the players and tournament staff stayed, he said.

The biggest sources of guests this summer were healthcare workers and the homeless people the city put up to limit the spread of the virus, Mr Dandapani said. About 180 hotels served those groups, he said.

Cristina Marino had worked as a server at the rooftop bar in the Hyatt Centric Times Square since it opened about five years ago. She and her husband, a bartender in the same hotel, were laid off and started collecting unemployment benefits. They are anxiously awaiting a call back to work.

Ms Marino said her managers were eager to reopen and had set three different reopening dates: a plan to reopen in August was postponed to September, then to October and most recently until November.

“This is difficult and really frustrating because we are dying to go back to work,” said Ms Marino, who said she was four months pregnant with her first child. “We love our jobs.”

Ms Marino said she and her husband, residents of the Riverdale neighbourhood of the Bronx, had gotten by on unemployment benefits, including the $600 (£466) weekly supplemental benefits from the federal government that ran out in July. They were awaiting three weeks’ worth of the $300 (£233) payments from the Federal Emergency Management Agency that Donald Trump arranged.

Their healthcare benefits had been scheduled to expire at the end of August, but union officials obtained an extension, paid for by the hotels, through the end of the year. That deal spared two of the clinics the union’s health fund operates, one in Harlem and one in Brooklyn, that were slated to close in October.

“We need healthcare,” Ms Marino said.

Tom Blundell, general manager of the Hyatt Centric, said he has been making a decision towards the end of each month about when a reopening seems feasible. “It’s kind of a moving target,” he said.

He recently set 10 November as the date but said in an interview that reopening then would hinge on a relaxation of the state’s quarantine rules, for one thing. Ending the ban on international travelers is also critical to restoring the hotel to profitability, he added.

“That would get us back to a place where we could really fight for survival,” he said. “With all of those things in place, there’s really not a fight to put up.”

New York Times