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March 18, 2020

CT hotel operators facing a hit more severe than ‘Sept. 11 and the 2008 recession combined’

Photo | Contributed Rocky Hill's Hampton Inn & Suites hotel is operated by Lotus Hospitality Inc.
By Joe Cooper

For hotel operator Gary Desai, the unknown economic impact of the coronavirus outbreak has created unprecedented hurdles to operate his Berlin-based hospitality management/development firm.

The president of Lotus Hospitality Inc., a family run business that operates five hotels in the Greater Hartford and New Haven regions, says he’s already reduced hours for an unspecified number of part- and full-time workers amid a major dip in occupancy.

“We have had to reduce worker hours substantially, and we are trying to avoid layoffs,” he said. “We are selling rooms, but it has been very slow.”

The spread of COVID-19, an illness caused by a novel strain of coronavirus, has forced Gov. Ned Lamont to discourage gatherings of 10 or more people across the state. That has resulted in nearly all events being canceled, eliminating the need for hotel stays driven by conferences, weddings and sporting events.

“We can’t give a ballpark, but the [economic] hit has been substantial,” said Desai, whose group manages several national brand hotels, including Choice Hotels International, Best Western International and Hilton Worldwide. “We are seeing declines in every segment of the business.”

Connecticut has now recorded 68 cases of COVID-19, but state health officials estimate that more than 6,000 residents likely have contracted the disease. There are at least 6,135 cases in all 50 states, Puerto Rico, the US Virgin Islands and the District of Columbia.

Lotus, and Connecticut’s slowly rebounding hotel sector, are facing a global pandemic that national experts say could become the largest-ever negative impact on the hospitality industry.

Nationally, more than 140 million rooms are expected to become empty in the next month, according to Chip Rogers, the president and CEO of the American Hotel and Lodging Association.

“As it continues to be unknown how long this public health situation will last, the coronavirus has already had a more severe economic impact on the [hotel] industry than September 11 and the 2008 recession combined,” Rogers said in a press conference call late Tuesday after a meeting with President Donald Trump’s administration on its response to the COVID-19 outbreak.

“This is crippling the hotel industry and the local communities they serve as well as the U.S. economy,” he said.

The American Hotel and Lodging Association estimates the nation’s hotel industry will lose nearly four million jobs in 2020, with a year-long occupancy rate of about 30%.

“That equates to $180 billion in wages, and a $300 billion hit to the national GDP,” Rodgers continued.

Due to global calls for social distancing, Desai’s facilities are working with guests to refund and reschedule their stays following guidelines set by their parent companies. The franchise brands are also setting extra standards for sanitation procedures on guest rooms and “high-touch” areas. Fitness centers and indoor swimming pools have been closed at the hotels.

"If we all do our part in social distancing we will get over this quicker," he said. “I still see long term success in this industry, but it’s going to be a tough period.”

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