COVID-19 effects

This is how coronavirus could impact the Texas hotel industry

This is how coronavirus could impact the Texas hotel industry

The Joule hotel
The Joule has closed temporarily. Photo courtesy of The Joule

Texas' economy continues to suffer as a result of the coronavirus-fueled economic slide, and the hotel industry is getting hit particularly hard. Hotel operators are still hoping to see a bump from the summer tourism season, but even that might be optimistic, an industry expert says.

Stay-at-home orders, travel restrictions, and clampdowns on gatherings in hotels (and restaurants) means Texas faces the coronavirus-provoked loss of 40 percent of the jobs that are directly and indirectly tied to the hotel industry, a recent report indicates. 

The forecast, released by the American Hotel & Lodging Association, envisions the loss of 268,797 jobs across the hotel industry and the industries that support hotels. That’s out of a combined 658,637 jobs in those sectors.

In the hotel industry alone, the study predicts the loss of 64,072 out of 145,617 jobs in Texas, or 44 percent. 

Chip Rogers, president and CEO of the American Hotel & Lodging Association, said in a late March release that the COVID-19 pandemic represents the biggest single decline in travel in modern times — worse than the post-9/11 era and the Great Recession.

"COVID-19 has been especially devastating for the hotel industry," Rogers says in the release. "Every day, more hotels are closing, and more employees are out of a job."

The association says hotel occupancy rates in some U.S. markets have dropped below 20 percent, forcing some properties to shut down at least temporarily. In DFW, Great Wolf Lodge in Grapevine and The Joule in downtown Dallas were among the first to close their doors temporarily.

Two popular Austin hotels, The Driskill and the JW Marriott, did the same.

“We had to make an extremely difficult decision to temporarily suspend hotel operations at the JW Marriott Austin to manage the pandemic’s effect on business and group travel. Our priority — above all else — is to protect the people that work for us, and the people that stay in our hotels and eat in our restaurants,” Mike Banas, director of communications and corporate affairs at White Lodging Services Inc., says in a statement.

Paul Vaughn, senior vice president of San Antonio-based hotel consulting firm Source Strategies Inc., says the coronavirus pandemic presents a unique and uncertain scenario for Texas’ hotel industry. The industry, he says, has entered “unprecedented territory.”

“In previous major events, like after the 9/11 attacks or during the Great Recession, people were still traveling and using hotels and other ancillary services, including restaurants, bars, and transportation. With the current situation, an extended period of self-quarantine means that people are not traveling to the typical gatherings that the lodging industry relies upon,” Vaughn tells CultureMap. “We expect to see an extended depression of the industry that could last through the end of the year or longer.”

While some Texas hotels will lay off staff and otherwise tighten their budgets to stay in business, he says, there's still hope for the summer tourist season.

“If life can get back to normal within the next month or two, businesses may recover quickly enough for the summer tourist season,” Vaughn says. “But at this point, that seems like an overly optimistic forecast.”