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Published in Economic Development

Grim national survey of hotels, restaurants show mass closures without additional federal aid

BY Tuesday, December 15, 2020 12:30pm

Additional mass closings and staff layoffs in the hospitality industry are expected without additional federal aid for businesses, according to recent surveys by national hotel and restaurant trade groups.

Thirty-three percent of Michigan restaurant operators say it is “unlikely” their restaurant will still be in business in six months without additional relief from the federal government. The survey was conducted Nov. 17-30 by the National Restaurant Association, which surveyed 6,000 restaurants across the country. A statewide trade group localized survey data for Michigan. 

MRLA President and CEO Justin Winslow COURTESY PHOTO

“It is fundamentally clear that the pandemic is decimating the hospitality industry in this state to a degree never seen or even imagined,” Justin Winslow, CEO of the Michigan Restaurant & Lodging Association, said in a statement. “While it will take several years and a stable economy to reclaim the size, impact and opportunities produced by this industry, we have not yet reached the bottom.” 

Hotels and restaurants have been among the hardest hit businesses during the COVID-19 pandemic with limited travel permitted earlier this year as well as dine-in bans and restrictions aimed to slow the spread of the virus. 

Michigan’s most recent indoor dining ban was extended through Dec. 20 “with no safety net” of federal aid, unlike prior restrictions, Jeff Lobdell, president of Restaurant Partners Management LLC, recently told MiBiz. The restaurant group operates businesses across West Michigan and the Traverse City area, including the Omelette Shoppe, Rockwell Republic, the Beltline Bar and Bagel Beanery.

“I had 20 restaurants to start this year and after the first 90-day lockdown I permanently closed three,” Lobdell said. “When we went to no sit-down dining and were told this would be three weeks, I kept them open (at a loss), and I had to shutter five more. I’m hoping it’s just temporary for those five. The businesses are hurting, employees are hurting, their families are hurting.”

For hotels, 71 percent will not make it another six months without more federal aid, and 77 percent of hotels will lay off additional employees, according to a survey of more than 1,200 hotels that are part of the American Hotel & Lodging Association. The survey of hotels across the country was conducted Nov. 10-13. 

Nearly half of the survey participants reported that they would have to close down hotels without additional aid, and more than one-third reported they will be facing bankruptcy or will sell properties by the end of 2020.

Hotel industry officials predict it could take three years for hotels to make it back to pre-pandemic business activity after occupancy levels hit historic lows this year. April was the worst month in Kent County as companies reported an 18 percent average occupancy rate, significantly lower than the April 2019 occupancy rate of 66 percent. 

Occupancy has risen over the past several months but is still much lower than last year. Kent County had an occupancy rate of 38 percent at the end of November, while the national forecast for year-end occupancy levels is at 41 percent. 

Staffing levels are expected to drop even more for restaurants as well. Of Michigan restaurant operators surveyed, 89 percent reported their current staffing level is lower than it would be in a typical year. Many restaurants anticipate staffing levels to decrease even more because of deteriorating business conditions. Sixty-three percent of Michigan operators reported that they expect staffing levels to decline in the next three months.

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