On Tuesdays in The News-Gazette, we’ll turn over our Commentary page to community members and other experts with local ties. If you have interest in weighing in on a topic making news, contact Editor Jeff D'Alessio at 217-393-8249 or firstname.lastname@example.org.
Today: Peter Tomaras
COVID-19 has severely impacted American businesses, with travel and tourism among the hardest hit.
Even as excellent disinfection protocols push the Domestic Travel Safety score above 50, and October load factors rise, ticket purchases at major airports are 70 to 80 percent below pre-pandemic levels. All public transportation remains in serious jeopardy.
Major retailers are blessed by the “essential” label, but the hospitality industry has been hammered. In March, nationwide hotel revenues and gross operating profit plummeted by 72 percent and 92 percent, respectively, even more in Illinois.
Occupancies crashed, recovered to 50 percent (bare survival level), then sank back to 44 percent in October. Extended-stay and leisure properties do somewhat better, but major convention hotels are devastated: in Chicago, the Palmer House, Hilton Chicago and others are closed.
Local hotels also struggle with big occupancy declines and cancellation of group business. With its newly-expanded conference center and Phase 4 allowing gatherings of 50, the I Hotel hosted a number of events — with optimized safety protocols.
But now, Gov. J.B. Pritzker’s reimposition of Phase 3, Tier 1 restrictions caps groups at 25, terminating event bookings statewide. Saddled with major capital investment and fixed costs, half-empty hotels cannot pay debt service, let alone ongoing franchise and management fees.
Worse off is the labor-intensive restaurant industry. By April, the pandemic had terminated 35 percent of 15.6 million restaurant jobs — more than 25 percent of all jobs lost nationwide. Gradually, many furloughed people were rehired, but colder weather ends outdoor seating and reverses that trend.
Pritzker’s November edict is tantamount to a death sentence for some restaurants and bars and impacts 120,000 jobs. However, there is no evidence linking the surge in COVID-19 to indoor dining. Says Chicago Mayor Lori Lightfoot: “That’s not what the data are showing us at all.”
Major franchise outlets that typically enjoy heavy drive-thru and delivery sales will endure. However, the National Restaurant Association estimates 95-plus percent of restaurants are small, family-owned businesses, and 100,000 have already closed.
Hope of a fall downturn in infections evanesced like morning fog, and with zero seating, Illinois table-service restaurants are sinking in quicksand. The Illinois Restaurant Association (IRA) has called on Pritzker to mitigate his “mitigation” decree that puts thousands more restaurants at risk of permanent closure. Lawsuits, with the IRA filing an amicus brief, are pending.
Restaurants are low-margin operations, and lost sales can never be recovered. Ten local restaurants have closed since April, and more will follow. The Visit Champaign County organization, struggling with its own 50 percent slash in funding, lists some 200 local restaurants on its website that offer takeout/curbside, delivery or catering. Customer support of such offerings is vital to the survival of favorite businesses.
Happily, Illinois is the fifth-best state for small business support. Local hospitality businesses have benefited from grants or loans through multiple programs: the Department of Commerce and Economic Opportunity (DCEO) Hospitality Emergency Program (lottery), the Illinois Small Business Emergency Loan Fund, Downstate Small Business Stabilization Program grants and the SBA-administered PPP (paycheck protection) program.
Better yet, the DCEO is administering Round 2 of the $636 million BIG (Business Interruption Grants) program that has helped at least 16 local hotels and restaurants. The future of some small businesses may ultimately depend on whether Congress can ever agree on a new stimulus package. Let us hope that local businesses can somehow access enough support to live through, and live down, this pandemic.
Meanwhile, suspended indoor dining is adding tremendous quantities of plastics and Styrofoam to the tons of gloves, masks, sanitizer bottles and test kits already flooding the nation’s solid waste stream. A positive outcome is that many hospitality operators will continue rigorous disinfecting protocols post-pandemic.
Lockdowns loom, yet the promise of a vaccine offers light on a distant horizon. COVID-19 has radically changed behaviors: people have learned to live without dining out, corporations are livestreaming video conferences and interacting with clients digitally.
It will be many months before customers feel confident enough to resume restaurant/bar habits, and hotels may not see pre-virus revenues before 2023.
For the foreseeable future, hospitality operators and furloughed employees are stuck in a hold-on pattern.
Peter T. Tomaras is a former hospitality operator and instructor and current consultant to the industry.