A new survey from the American Hotel and Lodging Association says seven in ten hoteliers will be out of business in six months.
Hotels big and small are crying out for the federal government to fund another relief package. Real Estate Economist Wade Ragas talked about why now is the time for hotels to be working on restructuring debt.
“A lender doesn’t want to be presiding over an empty non-functioning hotel,” Ragas says. “So there’s enormous pressure on the part of the property owners to negotiate with their lenders and try to get some sort of extension of payments.”
So while time is running out for hotels facing bankruptcy, closure and forced sales, Congress is dawdling over passing a rescue package.
Ragas explains why there isn’t much to look forward to: “I don’t see a way out of this that does anything other than leave this industry in quite rough shape until next year.”
Ragas says no action is likely on a relief package for the hotel industry until the Georgia runoff determines who controls the U.S. Senate. And neither side appears willing to bring up the issue until the matter is settled.
“Five months from now the situation on the ground is going to be very different,” he points out. “But the problem is that there’s relatively little damage being done to people by the virus, by February or March of next year, but enormous damage financially still occurring.”
Ragus says a second relief package is coming, it’s just not hammered out, yet.
“We’ll get into recovery mode by the second half of next year,” he says confidently. “But hotels will be looking for subsidy money over the next year, every few months or so.”
