CT leisure & hospitality sector doing better than most, but still faces tough road ahead
It”™s no secret that these are dark days for the leisure and hospitality sector. But there may be light at the end of the tunnel in Connecticut, according to some observers.
Although hotels were allowed to reopen on June 17, following several weeks of government-mandated closure, many delayed doing so as they took extra precautions. Thus did they miss out on the usually lucrative July 4 weekend ”“ in addition to most of the summer, when family vacations are at their height.
Complicating the situation is Connecticut”™s policy when it comes to out-of-state visitors, which by its nature is always in flux. Anyone traveling here from a state with a positive Covid case rate higher than 10 per 100,000 residents, or higher than a 10% test positivity rate over a 7-day rolling average, or from a country for which the Centers for Disease Control and Prevention has issued a Level 3 Travel Health Notice, is directed to self-quarantine for a 14-day period from the time of last contact within the identified state or country. As of Oct. 5, there were 35 states and U.S. territories on that list.
Hoteliers have been reluctant to police out-of-state license plates in their parking lots, especially given that rental cars often carry out-of-state tags.
The plight of restaurants has also been well publicized. First restricted to only offering delivery or curbside pickup, they were then allowed to provide outdoor dining, but only 50% capacity indoors entering Phase 2; with Phase 3, starting Oct. 8, that was increased to 75%. (Indoor bars will remain closed.)
Connecticut Restaurant Association Executive Director Scott Dolch called the Phase 3 decision “a recognition of (restaurateurs”™) hard work and commitment to being part of the solution, and a recognition that the state must help a sector that at its peak employed 10% of the state”™s workforce.”
In addition, while the state”™s tourism industry has been generating about $15.5 billion in business sales, $2.2 billion in tax revenues ”” including $960 million in state and local taxes ”” and 84,254 jobs (123,500 total supported jobs) — the total impact won’t be known for some time, according to Randy Fiveash, director, Connecticut Office of Tourism.
“After experiencing the most Covid-19 related job losses of any sector in April, Connecticut”™s leisure and hospitality sector is now seeing one of the largest employment gains of any industry in the state,” Fiveash declared. “We”™re encouraged by this data and are hearing from many business owners this fall that they are seeing strong visitor activity by Connecticut residents and visitors from neighboring states who have come to enjoy the fall foliage and outdoor activities.”Â
 “In terms of recent traveler spending, Connecticut is well aligned with other New England states ”” most of which were hard hit by the pandemic early on,” he continued. “We know the winter will bring new challenges, but we also know our tourism businesses are working incredibly hard and creatively to offer both safe and inviting experiences for their guests. We”™re confident this industry will continue to rise to the occasion and be a bright spot in the state”™s overall recovery.”
Meanwhile, the U.S. Travel Association (USTA) is estimating that spending on domestic travel will decline by 75% to $39 billion this year, with the number of trips taken by U.S. residents falling by 30% to 1.6 billion ”“ the lowest number since 1991.
In August the USTA announced the results of a report prepared for it by Tourism Economics, which concluded that, despite accounting for 11% of all pre-pandemic employment in the U.S., the Leisure and Hospitality sector accounts for some 40% of the nation”™s unemployed. If every industry recovered to its pre-pandemic employment level except for the sector, the report said, the overall employment rate would fall from 10.2% to 6.2% — still 2.7% higher than pre-pandemic levels.
As a result, various leisure and hospitality associations are ramping up pressure on Congress to provide additional economic aid.
“If the primary point of aid from Washington is to help U.S. employers and working Americans, then by every objective measure the American travel and tourism industry ought to be right at the top of the priority list,” said USTA President and CEO Roger Dow. “Substantial portions of the travel sector missed out on earlier rounds of relief, and if the next deal doesn”™t get done, the acute pain being felt by travel workers is going to extend through and well after the election.”
On Oct. 1, the CEOs of 17 of the largest U.S. travel companies joined the USTA in issuing a statement insisting that Congress act, saying that a relief package passed before the Nov. 3 election would “give travel employers ”” and the millions of livelihoods they support ”” a fighting chance to survive.
83% of travel employers, which are classified as small businesses, — including large numbers of the signatories”™ own franchisees ”“ “are struggling to keep their doors open,” the statement added.
“If there were ever a moment when American businesses and workers need leadership that transcends politics, it is now,” the statement concluded. “We respectfully request that political leaders engage in a continuous dialogue for however long it takes to achieve action. Failure to do so will almost certainly delay a recovery for years.”
Signatories included the heads of Delta, United and JetBlue airlines; the Hyatt, Hilton, Best Western and Marriott hotel chains; and Disney Parks.
Also calling for federal relief is the American Hotel & Lodging Association (AHLA), which during a Sept. 29 Zoom call with reporters said that as of September, on a national basis, hotels have lost 871,065 of approximately 2.29 million direct jobs since the pandemic began, with hotel-related jobs (including various supply chain vendors) plunging by 1.9 million from 8.3 million. Without Congressional aid, AHLA said, another 1.6 million direct jobs and an additional 3.7 million hotel-related jobs could be lost.
On Oct. 6, President Donald Trump announced no stimulus package would arrive before the Nov. 3 election.
CT outperforming U.S.
Meanwhile, Robert Murdock, president of the Connecticut Convention & Sports Bureau (CTCSB), the state”™s official meetings and sports event sales and marketing organization, told the Business Journal that while “everybody basically dropped out in March and early April,” canceling a host of conventions, tournaments and other events, today “Connecticut is doing better than the rest of New England.”
Ginny Kozlowski, executive director of the Connecticut Lodging Association, concurred. For the month of August, the state recorded a 44.2% occupancy rate (down from 71.8% on a year-over-year basis) and an average daily rate (ADR) of $100.12, versus $124.17. On a three-month running average basis, ending in August, Connecticut saw a 55.8% occupancy rate (down from 71.5%) and an ADR of $109.16, versus $123.89.
New England as a whole posted a 55.1% occupancy rate, while the U.S. as a whole recorded a 48.6% occupancy rate, against 71.5% for the comparable period in 2019, and an ADR of $102.46, versus $132.75.
Kozlowski noted that the figures do not include ancillary services such as parking, food and beverage, and meeting rooms.
“We are doing better, but we have a tough road ahead of us,” she said, noting that while a bump in leisure travel will probably be seen during the fall foliage season, the absence of most college sports will have a further negative effect.
Noting that New York has recently had to close schools and reintroduce restrictions on restaurants, Kozlowski added: “We can”™t take that kind of impact so close to what we already had.”
“It”™s not great ”“ we still have a lot of work to do,” Murdock agreed. But he gave Gov. Ned Lamont and his administration credit for acting quickly and decisively, not just in closing businesses but in how it has been reopening them.
The convention business “will take a while before coming back,” he said. “It”™s really all about safety right now, and getting the virus under control.”
While allowable capacity increases on Oct. 8, Murdock questioned what that will really mean for large facilities like the 10,000-seat Webster Bank Arena in Bridgeport, which will only be able to accommodate half of that number, socially distanced. “I don”™t think they”™re going to turn on the lights, unless they have something they can fit into a smaller conference room,” he said.
The arena did not return a call for comment, though its website does not list any upcoming events.
Murdock said that some smaller sporting events, such as the Hartford Alliance soccer club and the New Britain Bees summer baseball team, had successfully played their games, albeit at 25% capacity.
Looking ahead, Murdock said that hybrid meetings are probably here to stay, though he expressed confidence that, once a vaccine is found ”“ “spring-ish, depending on who you listen to,” he said of the timing ”“ in-person business travel will probably increase significantly.
“Face-to-face meetings are still very important,” he said. “Being in a social setting and interacting on a more personal level ”“ virtual trade shows and meetings can”™t top that for most people.”
The CTCSB has also been working hard to pick up events from other states where stronger restrictions are in place, Murdock said, with several youth sports events possibly willing to relocate.
As for the lodging sector, Kozlowski said that, even if an efficacious vaccine is found, a full recovery probably won”™t come until 2022 ”“ or possibly 2023. The reason is that questions remain about how long distribution of the vaccine will take; what it will require (single or multiple injections, whether or not boosters will be needed); and what rebuilding confidence in business travel will involve.
“We”™re very eager to see that Oct. 8 date,” Kozlowski said.