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Big-Name Hotels Go Empty and Smaller Owners Are Hurt Big-Name Hotels Go Empty and Smaller Owners Are Hurt
(about 4 hours later)
It all started to fall apart for Vinay Patel about a week ago.It all started to fall apart for Vinay Patel about a week ago.
The occupancy rates at the nine hotels he owns in the Northern Virginia area plummeted from about 50 percent to only a handful of rooms each night because of the coronavirus pandemic. He scrambled to cut costs. Floors were shut down. Bar and hot food service was stopped. A laundry dryer was turned off. And he started to lay off staff.The occupancy rates at the nine hotels he owns in the Northern Virginia area plummeted from about 50 percent to only a handful of rooms each night because of the coronavirus pandemic. He scrambled to cut costs. Floors were shut down. Bar and hot food service was stopped. A laundry dryer was turned off. And he started to lay off staff.
“It’s just gut-wrenching,” Mr. Patel said, adding that he was trying to retain employees who didn’t have a working spouse or a second income.“It’s just gut-wrenching,” Mr. Patel said, adding that he was trying to retain employees who didn’t have a working spouse or a second income.
Among Mr. Patel’s chief worries is debt — the mortgages he holds on the Hampton Inn and Aloft by Marriott and other hotels he owns.Among Mr. Patel’s chief worries is debt — the mortgages he holds on the Hampton Inn and Aloft by Marriott and other hotels he owns.
“I’ve reached out to my lenders saying, ‘We have to work through this together,’” Mr. Patel said.“I’ve reached out to my lenders saying, ‘We have to work through this together,’” Mr. Patel said.
Early Wednesday, lawmakers in Washington reached an agreement for a $2 trillion stimulus package that would be the largest in U.S. history. The hotel industry, which has been hit particularly hard, had asked for a $150 billion bailout. As many as four million hotel employees — housekeepers, maintenance workers, desk clerks and others — have been laid off or will be let go in coming weeks, according to the American Hotel and Lodging Association.Early Wednesday, lawmakers in Washington reached an agreement for a $2 trillion stimulus package that would be the largest in U.S. history. The hotel industry, which has been hit particularly hard, had asked for a $150 billion bailout. As many as four million hotel employees — housekeepers, maintenance workers, desk clerks and others — have been laid off or will be let go in coming weeks, according to the American Hotel and Lodging Association.
Much of the concern in the industry is on the roughly $350 billion in mortgages, construction loans and commercial and industrial loans taken out on hotels and held by banks, insurance companies and investors.Much of the concern in the industry is on the roughly $350 billion in mortgages, construction loans and commercial and industrial loans taken out on hotels and held by banks, insurance companies and investors.
The bulk of that debt wasn’t borrowed by the big chains, like Marriott International and Hilton Hotels & Resorts. Rather, it belongs to individuals like Mr. Patel — who has taken out mortgages on each of the hotels owns — investors and even publicly traded real estate funds. In 2018, about 93 percent of the nearly 33,000 hotels in the United States were franchised, according to the market research firm Frandata.The bulk of that debt wasn’t borrowed by the big chains, like Marriott International and Hilton Hotels & Resorts. Rather, it belongs to individuals like Mr. Patel — who has taken out mortgages on each of the hotels owns — investors and even publicly traded real estate funds. In 2018, about 93 percent of the nearly 33,000 hotels in the United States were franchised, according to the market research firm Frandata.
And these owners say they need help too.And these owners say they need help too.
“I don’t think there is a proper definition or understanding of what will go to us and what goes to the big brands,” said Buggsi Patel, who has been in the hotel business for 32 years and owns two dozen hotels in Oregon, Washington State and Idaho. He said he had mortgages on all of his hotels and last week let go 65 percent of his employees. “It’s one thing to help out Hilton and IHG, but what are they going to do for us?”“I don’t think there is a proper definition or understanding of what will go to us and what goes to the big brands,” said Buggsi Patel, who has been in the hotel business for 32 years and owns two dozen hotels in Oregon, Washington State and Idaho. He said he had mortgages on all of his hotels and last week let go 65 percent of his employees. “It’s one thing to help out Hilton and IHG, but what are they going to do for us?”
Chip Rogers, the president and chief executive officer of the American Hotel & Lodging Association, said it was lobbying to make sure all hotels have access to lending, pointing to a change from the Small Business Administration that would provide relief for hotels that employ fewer than 500 people per location.Chip Rogers, the president and chief executive officer of the American Hotel & Lodging Association, said it was lobbying to make sure all hotels have access to lending, pointing to a change from the Small Business Administration that would provide relief for hotels that employ fewer than 500 people per location.
“The points we’ve been trying to make all along, what we’ve been advocating for, is getting money into the hands of small business owners to make sure that their employees are paid and to make sure they can service their debt so that when this passes, there are jobs for those employees to come back to,” Mr. Rogers said.“The points we’ve been trying to make all along, what we’ve been advocating for, is getting money into the hands of small business owners to make sure that their employees are paid and to make sure they can service their debt so that when this passes, there are jobs for those employees to come back to,” Mr. Rogers said.
The franchise model in hotels dates to the 1950s, when the Howard Johnson chain franchised a motor lodge in Georgia. It grew in popularity during the economic downturn of the 1990s when large hotel brands, which had put mountains of debt on their balance sheets to construct hotels, were hit hard.The franchise model in hotels dates to the 1950s, when the Howard Johnson chain franchised a motor lodge in Georgia. It grew in popularity during the economic downturn of the 1990s when large hotel brands, which had put mountains of debt on their balance sheets to construct hotels, were hit hard.
Over the past two decades, many large hotel brands like Marriott and Hilton have moved to a so-called “asset light” model, in which they don’t take out mortgages to build hotels. Instead, the risk is held by individuals or investment funds that borrow the money.Over the past two decades, many large hotel brands like Marriott and Hilton have moved to a so-called “asset light” model, in which they don’t take out mortgages to build hotels. Instead, the risk is held by individuals or investment funds that borrow the money.
Marriott, for example, owned or leased just 28 properties in the United States that operated under brand names including Marriott, Sheraton, Westin, Residence Inn and Fairfield, at the end of last year. Nearly 4,500 hotels operating under those various brand names were owned by franchisees.Marriott, for example, owned or leased just 28 properties in the United States that operated under brand names including Marriott, Sheraton, Westin, Residence Inn and Fairfield, at the end of last year. Nearly 4,500 hotels operating under those various brand names were owned by franchisees.
The hotel owners pay the parent brands a percentage of their total revenues, as well as reservation system fees and group loyalty fees. Franchisees say the various fees can total as much as 20 percent of their total revenues.The hotel owners pay the parent brands a percentage of their total revenues, as well as reservation system fees and group loyalty fees. Franchisees say the various fees can total as much as 20 percent of their total revenues.
Conversations have started between the parent brands and the hotel owners about reducing or deferring some of the fees. Best Western, for instance, cut many of the various fees by half last week.Conversations have started between the parent brands and the hotel owners about reducing or deferring some of the fees. Best Western, for instance, cut many of the various fees by half last week.
Heetesh Patel, who owns four hotels across Tennessee, Texas and Florida, said he asked for a deferral of fees after he lost $1 million worth of reservations in five days. (The three Patels are not related.)Heetesh Patel, who owns four hotels across Tennessee, Texas and Florida, said he asked for a deferral of fees after he lost $1 million worth of reservations in five days. (The three Patels are not related.)
Updated June 22, 2020 Updated June 24, 2020
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
“I’ve been in the business for 20 years and my family, for 40 years, and we are stunned at how fast and how hard this has hit,” said Mr. Patel, who said he has cancellations for June. “I’m speaking to a number of operators around the country and many are saying they cannot pay their mortgage this month, not the principal and the interest.”“I’ve been in the business for 20 years and my family, for 40 years, and we are stunned at how fast and how hard this has hit,” said Mr. Patel, who said he has cancellations for June. “I’m speaking to a number of operators around the country and many are saying they cannot pay their mortgage this month, not the principal and the interest.”
Buggsi Patel said that in early conversations with the banks that have lent him money, there have been discussions about deferring payments or paying interest only on the loans for a period of time. Banks should have a fair amount of flexibility as commercial mortgages for lodging currently make up about 7 percent of their total loans, well behind multifamily residential or office buildings totals, said Russell Hughes, a vice president of banking at data firm Trepp.Buggsi Patel said that in early conversations with the banks that have lent him money, there have been discussions about deferring payments or paying interest only on the loans for a period of time. Banks should have a fair amount of flexibility as commercial mortgages for lodging currently make up about 7 percent of their total loans, well behind multifamily residential or office buildings totals, said Russell Hughes, a vice president of banking at data firm Trepp.
But Mr. Patel said he was more concerned about the portion of his mortgages, about 20 percent, that are tied up in commercial mortgage-backed securities.But Mr. Patel said he was more concerned about the portion of his mortgages, about 20 percent, that are tied up in commercial mortgage-backed securities.
A popular instrument before the financial crisis of 2008, these securities have made a comeback in recent years as banks use them to remove loans from their own balance sheet by bundling them into a pool of other loans, which are then issued as a bond to investors.A popular instrument before the financial crisis of 2008, these securities have made a comeback in recent years as banks use them to remove loans from their own balance sheet by bundling them into a pool of other loans, which are then issued as a bond to investors.
These securities tend to have less flexibility when it comes to deferring or restructuring payments.These securities tend to have less flexibility when it comes to deferring or restructuring payments.
Vinay Patel is not just worried about his nine hotels that are still open, he’s also worried about the four hotels he has under construction. He had planned to open an 80-room Comfort Inn late this summer and a Tru by Hilton in December.Vinay Patel is not just worried about his nine hotels that are still open, he’s also worried about the four hotels he has under construction. He had planned to open an 80-room Comfort Inn late this summer and a Tru by Hilton in December.
Thanks to low interest rates and high demand among travelers, construction of hotels has been running strong. This year, more than 1,100 hotels are expected to open, according to analysts at Lodging Econometrics.Thanks to low interest rates and high demand among travelers, construction of hotels has been running strong. This year, more than 1,100 hotels are expected to open, according to analysts at Lodging Econometrics.
Mr. Patel estimates it costs about $150,000 per room to construct a hotel, though it can differ somewhat depending on location. So a typical 100-room hotel would cost a developer about $15 million. The owner usually puts down 30 percent cash and borrows the remaining 70 percent, he said.Mr. Patel estimates it costs about $150,000 per room to construct a hotel, though it can differ somewhat depending on location. So a typical 100-room hotel would cost a developer about $15 million. The owner usually puts down 30 percent cash and borrows the remaining 70 percent, he said.
“It’s the most I’ve ever had under construction at a time. And the problem with a construction site is that you just can’t stop. You have to finish building the hotel,” he said. “We were riding high for the last seven or eight years. And yes, people thought something could happen, but nothing of this magnitude.”“It’s the most I’ve ever had under construction at a time. And the problem with a construction site is that you just can’t stop. You have to finish building the hotel,” he said. “We were riding high for the last seven or eight years. And yes, people thought something could happen, but nothing of this magnitude.”