Hospitality CEO on COVID-19 impact on hotel industry: It's tough, it's unprecedented

Summary

In this interview, Dave Johnson, CEO of Aimbridge Hospitality, discusses the impact of the pandemic on the hotel industry, with many franchisees struggling and facing closure. He notes a slow recovery, with some signs of life in leisure travel to destinations where social distancing is easier. Johnson emphasizes the importance of cleanliness protocols and the need for a vaccine to boost confidence in travel. He also predicts a stronger future for larger hotel operators due to their ability to weather the storm financially.

Takeaways

• 🏨 The travel industry is facing unprecedented challenges with many hotels experiencing low occupancy rates or closure.
• 🛏️ Franchisees are struggling and may require government relief to survive the downturn in the hospitality sector.
• 📈 There are signs of recovery in leisure travel as some destinations like beaches begin to open, but business travel remains significantly impacted.
• 🌐 Ambridge Hospitality operates a large number of hotels and resorts, which allows them to gather extensive data on travel trends and consumer behavior.
• 🚗 There is an increase in domestic leisure travel as people prefer to drive to destinations where they can maintain social distancing.
• 🧼 Hotel brands are implementing new cleaning protocols to ensure guest safety, which is a responsibility shared by franchisees.
• 💼 Larger franchisees with strong balance sheets are more likely to survive the crisis compared to smaller operators.
• 🛑 Business travel is still very slow, and many companies have imposed travel restrictions due to the pandemic.
• 🛌 Changes in hotel amenities are being made, such as rearranging furniture to allow for social distancing, and buffets may not return for a long time.
• 🏋️‍♂️ Gyms in hotels are still closed, and the reopening process is dependent on local ordinances and safety protocols.
• 💉 The return of the hotel industry to normalcy largely depends on scientific advancements like therapeutics and vaccines, which will restore consumer confidence.

Q & A

How is the travel industry currently affected by the pandemic?

The travel industry is taking a significant hit due to the pandemic, with many hotels experiencing low occupancy rates and some even being closed.

What is the current situation for hotel franchisees according to Dave Johnson?

Franchisees are struggling, with some needing relief from the government. Many hotels that were running at 70% occupancy in January are now closed or running single-digit occupancy.

What signs of relief are being seen in the leisure travel sector?

There are signs of relief in leisure travel as beaches and leisure destinations start to open up, giving people the option to travel by car and maintain social distancing.

How does Ambridge Hospitality foresee the near-term future for hotel bookings?

Ambridge Hospitality is seeing some positive signs for bookings, especially for summer and around Memorial Day weekend, for destinations that are drivable and offer the ability to social distance.

What is the responsibility of franchisees regarding new cleaning protocols?

Franchisees are responsible for implementing the new cleaning protocols set by the hotel brands, ensuring that the rooms are as safe as possible for guests.

How does Dave Johnson view the survival of large franchisees during this crisis?

Dave Johnson believes that larger franchisees with strong balance sheets and partnerships may actually survive and come out stronger due to a flight to scale and quality in the industry.

What impact does the pandemic have on business travel and group conventions?

Business travel and group conventions are significantly impacted, with very low demand for main gateway cities and many companies imposing travel restrictions.

What are the chances of a large franchisee going under during this crisis, according to Dave Johnson?

Dave Johnson suggests that it might be the smaller franchisees that are more at risk, not the larger ones, as they may not have the financial resources to weather the storm.

What factors does Dave Johnson believe will help the hotel industry recover?

Johnson believes that a combination of scientific advancements like therapeutics and vaccines, cleanliness standards, and a gradual return of confidence among different age groups will contribute to the industry's recovery.

How are hotel amenities being adjusted to accommodate social distancing?

Hotel amenities such as pools and beach resorts are adjusting by spreading out furniture to allow for social distancing. Buffets are expected to take longer to return due to the challenges of maintaining safety.

What is the current status of gyms in hotels?

Gyms in hotels are still mostly closed, with the situation varying by state and local ordinances. Some areas are starting to open gyms with strict protocols in place.