His company, Vision Hospitality Group, owns 37 hotels in six states and it had seen record business in January and February, according to Patel. Things were going so well, he was planning to open two more hotels this year, and seven next year.
But then, in early March, Patel met with executives from Marriott, the brand many of his hotels operate under, to discuss business. China came up. The hotel business there had plummeted amid the coronavirus outbreak.
“We were saying ‘that is awful,’ and ‘thank God that that’s not the situation — or what we expect — in this country,'” Patel recalled. “And then Friday the 13th came.”
Cancellation reports from Patel’s hotels started escalating and turned dire. For March, April and May, the projected occupancy sank below 10%.
“We were in denial. We were in shock. It was almost surreal,” he said.
Patel has since had to furlough 1,100 of his 1,500 employees. “That’s really broken my heart. Every day I get up and I think about ‘how can I bring my people back?’.”
A nightmare for hotels
There have been mass furloughs and layoffs across the industry. Many executives have given up their salaries or taken pay cuts. Some hotels have closed temporarily. Others, like Patel’s, are staying open with a skeleton staff.
“It’s a short-term preservation package that can carry the industry for a couple of months,” Rogers said. “But if you get to June and people aren’t traveling again, then the problem we have today will be much worse.”
The CARES Act limits loans to 250% of average monthly payroll, which will be enough only to meet payroll and debt obligations for four to eight weeks, according to Rogers. His group believes hotels need more financial support, and he said lobbying is ongoing for an additional stimulus package to help hotels with their debts.
Exactly how much is needed is unclear, and depends on how quickly revenue returns. Rogers also said a stimulus will be needed once the virus passes, to encourage people to get out and travel again.
In the meantime, he’s encouraging hotels to talk to their mortgage lenders and adjust their payment schedules. Rogers said that banks have been good so far about offering flexibility on payments. Patel, for example, said that most banks are offering 90-day deferrals, and some 180 days.
Patel expects that many hotels won’t survive.
“When this has been lifted, please go out and travel and eat and let’s be Americans again,” Patel said. “But only when it’s safe.”