WA Hotel Group says pandemic pressures won’t end in 22
If 2020 and 2021 were survival years for restaurants and hotels, 2022 begins the big dig, as if to get out of debt.
“The tone and reasons for the relief are a little different from 2021,” Anthony Anton, president and CEO of the Washington Hospitality Association, said in a Friday press conference via ZOOM.
The association represents more than 6,000 members of the hotel, restaurant and hospitality industry in the state.
According to Anton, the restaurant industry as a whole saw a 30% drop in year-over-year sales from the second quarter of 2020 to the first quarter of 2021 compared to 2019, with bars alone seeing a drop. by 54%.
“We now have a full year of revenue numbers from COVID. And we lost $5.4 billion as an industry compared to 2019,” he told reporters.
The state’s hotel workforce as a whole was short by 28,600 workers as of mid-November 2021, a 12% decline in the workforce, and Omicron is making the situation worse.
“In addition to the 12%, we are short of Omicron,” he said, adding another 15 to 20% absences of sick people. “A lot of operators are like, ‘I don’t have enough people operating today – I’m going to close’, which I applaud on a community level. It means they are protecting you and doing the right things.
“But…it keeps piling up on that debt,” he added.
While labor shortages are hitting all sectors, closures specific to the restaurant and hospitality industry, particularly in 2020, Anton said, have also resulted in the loss of around 40% of the workforce in the uncertainty of reopenings and who would be rehired.
“When we came back, a lot of our workforce went looking for the job they knew would be there. And now we are trying to recover,” he said.
Questions remained about who would want to return to public-facing jobs in the event of a pandemic and a public that is not uniformly supportive of vaccinations or even COVID safety protocols.
He projected a minimum period of three to five years of labor shortages “without any other type of dynamic change”. This could mean more random closing days to ensure workplaces have enough staff, as was the case when Omicron ramped up at places like Starbucks.
“A lot of them are going to look at what shifts are profitable. And the old adage that ‘I have to stay open seven days a week all the time’ will probably revert to ‘if I’m slow and it’s not a profitable week, do I need to be open?”
He noted that the average debt for full-service restaurant operators due to the pandemic is $160,000. He cited figures that with an average annual net profit for sites below $50,000, operators are essentially facing three years of no revenue, assuming they can make a 4% margin.
“While Congress stepped up and created the Restaurant Revitalization Fund, and that’s great, it only provided enough money to fund about less than half of qualifying restaurants. So many of our restaurants still carry this debt,” he said, adding that many are running out of time to pay off that debt.
Add to that the continuing supply chain shortages for food deliveries, and 2022’s time to “dig up” becomes even tougher than the previous two years.
While more than 3,300 restaurants closed statewide between January 2020 and May 2021, plus another 243 between June and November 2021, “that’s about 1,400 less than expected,” he said, showing community support and outside help.
Accommodation was hit even harder in Washington, he noted, seeing a 62% drop in business, and the impacts weren’t always obvious to the public.
“While many of us can easily watch and see closed businesses in other industries, much of what happens in hosting happens behind the scenes,” he said. “And closure is a much less feasible option.”
In Pierce County, numbers have increased year over year (2020-2021), but still remain below 2019 in terms of hotel occupancy, average hotel daily rate and revenue per available room , according to preliminary partial data provided by Travel Tacoma – Mt Rainier Tourism and Sport.
The partial data showed Pierce County hotel room occupancy peaked just after July 4 at or just above 80% and remained above the national average for most of the pandemic.
The full release of spending data is expected in the spring.
Anton checked off areas of relief that could help immediately.
“On the accommodation side, in particular, we will seek reimbursement for eviction moratorium, documented and other costs that accommodation has incurred during COVID,” he said. “On the Congress side, fill the rest of the restaurant revitalization fund and get the Save the Hotel Jobs Act moving.
“And in communities, individually… If you can continue to do outdoor dining, if you continue to do some of the things that you have stepped up to help people get out of debt, that will be very helpful. And then… politically or otherwise, give the industry more time to get out of the hole it’s in.