Summer travel update with Loews Hotel CEO

Third-party hotel occupancy data shows recent signs of improvements from COVID-19 pandemic lows in March and April but have stalled somewhat since June at 45.9%. These trends are somewhat consistent with what hotel chain Loews Corporation (NYSE: L) is seeing, even though it doesn’t disclose individual occupancy rates, CEO Jonathan Tisch said on CNBC’s “Closing Bell.”

Challenging environment

Loews was very excited to reopen its hotels and welcome guests but the hotel chain has heavy exposure to states where COVID-19 infections are rising, Tisch said. What was previously encouraging trends in fighting the pandemic has since reversed and this puts the company in a difficult position.

This summer, the majority of people who plan on traveling will drive to a location near their homes. Expectations for business travel are tampered through at least the Fall season. Group travel and conference are also subject to local rules and guidelines that mostly limit gatherings to at most 25 or 50 people.

International travel is quite bluntly “not going to come back for a while.” The travel and tourism industry is the largest sector in the world and millions of people have either already lost their jobs or are at risk of losing their jobs if current trends continue. 

Nevertheless, the travel industry as a whole remains optimistic and it is important for the group to emphasize a safe environment for guests. In fact, a hotel is an ideal environment to maintain social distance protocols given hundreds of rooms and even weddings that are taking place in areas where permitted to do so can respect social distancing.

Government help

The U.S. government is reportedly working on the final details of a fresh stimulus bill and the U.S. Congress should extend the Payroll Protection Program (PPP) through the end of 2020. The government should also consider changes to the tax code, such as reinstating the business meals deductible or introducing a tax credit for travel.

Destination Marketing Organizations are also hurting and they can’t afford to promote travel to a particular city or location.

“Those are the kinds of ideas that Congress needs to think about for our industry,” he said.

Congress should also consider changes to liability protection and this would be helpful to many other sectors.

Failure to take action to support hotels and promote tourism could result in painful bankruptcies. Current estimates call for 20% of all New York City hotels to not be able to reopen and that “might be the story across the board” in the U.S.