Report: Texas hotels devastated by COVID-19 may have reached point of no return

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A report states approximately 90% of hotel workers in Texas have been furloughed. | Adobe Stock

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With declines of up to 90% in guest room revenues, a report from the Texas hotel industry said hotels in the state may be reaching a point from which they cannot recover.

“Without immediate action to reopen the Texas economy, the hotel industry in Texas faces an existential crisis,” a Texas hotel industry brief said.

Nationally, hotels employ 5.1% of the total U.S. workforce contributing $660 billion to the country’s overall GDP. Currently hotels across the country are losing $400 million in room revenues per day and tax revenues could drop $16.8 billion for 2020.

The report said prior to the COVID-19 pandemic in Texas, more than 5,000 hotels employed more than 335,000 workers before state-mandated shutdowns began in March.

In Texas the situation is worse than the national average. Approximately 70% of hotel workers have been furloughed from work nationwide while the rate in Texas is 90%.

The report said if the shutdowns continue much longer, hotel mortgage delinquency rates will rise, threatening the possibility that the hotels could ever reopen. Currently, 40.9% of hotel loans in Texas are in default. The figure could soon rise to 80%, the report stated.

In Houston, 66% of hotels are in default.

Figures from the American Hotel & Lodging Association show that Texas has lost 101,972 direct hotel jobs and 296,387 jobs in total counting support jobs.

The state is on track to lose per month $940 million in annual sales and local taxes from the shutdowns, $4.6 billion in business sales, $1.3 billion in paychecks. 

“The hotel and hospitality industry has been an economic engine for Texas generating $7 billion in annual tax revenue,” the report said. “The industry has been decimated by mandated shutdowns.”  

The report predicted in what might become a best-case scenario that pre-shutdown occupancy levels in Texas hotels may not be back to normal until at least 2023 or 2024.   

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