‘Herculean effort’ needed for R.I. hospitality sector

BY CASSIUS SHUMAN | Shuman@PBN.com

(Editor’s note: A version of this story was first published on PBN.com on Jan. 28.) FAROUK RAJAB SAYS there is “no clear path forward” for economic recovery of his downtown Providence hotel that has been crippled by travel restrictions and health and safety guidelines.

Rajab, who is general manager of the Providence Marriott Downtown and chair of the Rhode Island Hospitality Association’s board of directors, said on Jan. 28 that the only hope right now is vaccination. He painted a dire picture for his hotel and the entirety of the hospitality industry during an interview with Providence Business News.

“I don’t think we will come back to employment levels any time soon,” he said. “Stimulus can help my associates who have been furloughed, and keep the lights on, but it can’t stimulate travel. I can’t convince people to travel.

“The road to recovery is through the vaccinations,” he added, while acknowledging issues associated with the rollout. “We have to work harder to make sure we have a clear plan.”

Rajab said he had 250 employees working for him before the pandemic. “That is gone now,” he said, noting that his workforce has declined by 90% amid the crisis to 20 employees. His hotel is filled to about 16% occupancy per day on average, “which is scary because that is not sustainable,” he said.

Compounding the difficulties is employees who were trained for roles at the hotel “have abandoned the industry” altogether. Another problem, he said, is that the pandemic has changed behavior, with people meeting via Zoom and other internet platforms instead of traveling.

“Is corporate travel going to come back?” he asked. “I think the corporations have a social responsibility to bring travel back to Rhode Island.”

Rajab said while there is hope with the vaccine, and typically an uptick in business during the summer season, Providence is not a big draw for visitors at that time of year. So, while hotels in Newport, Westerly and on Block Island might see 80% occupancy in the summer, he anticipates that his hotel will see about 60% capacity.

“How do we entice people to come to Providence at that time?” said Rajab. “There was no WaterFire last year. There were no theaters open or festivals. So, there are a lot of challenges we need to figure out.”

The latest data supports Rajab’s perspective.

The leisure and hospitality industry had the highest amount of job losses from February to December of 2020, as reported by the R.I. Department of Labor and Training on Jan. 22. Its report noted that the industry lost 42% of its workforce, 30% higher than the next hardest-hit sector, health services, which reported a 13% decline.

The American Hotel and Lodging Association inaugural State of the Hotel Industry 2021 report predicts the addition of 200,000 jobs in 2021 in the United States, after shedding 670,000 due to the pandemic. However, the industry’s employment level is projected to remain nearly 500,000 jobs below its pre-pandemic number of 2.3 million employees.

Other findings suggest that hotel occupancy rates will drop to an average of just 52% in 2021, compared with 66% in 2019. The onset of the COVID-19 pandemic brought U.S. hotel occupancy rates to a historic low of 24.5% in April 2020, while the annual occupancy rates fell to roughly 44% for the full year. Occupancy rates are projected to rebound more significantly in 2022, reaching 61.4%, and the number of rooms sold is expected to reach 1.23 billion, nearing 2019 levels.

Prior to the pandemic, the U.S. hotel industry’s 5.3 million guest rooms generated $168 billion in annual revenue, not including the revenue generated by meeting rooms and other sources. In 2020, hotel room revenue fell by nearly 50% across the country to $84.6 billion. That’s anticipated to increase by only $25.9 billion this year, still 34% below 2019 levels. In 2022, room revenue is projected to rebound a bit further, hitting an estimated $144 billion, but still well below 2019 numbers. n

RESERVATIONS ABOUT THE FUTURE: Farouk Rajab, general manager of the Providence Marriott Downtown and chairman of the Rhode Island Hospitality Association’s board of directors, doesn’t see hotels rebounding quickly.

Sometimes the most important connection is a human one.

Mike Clarkin SVP & Corporate Sales Manager

When you have money matters on your mind, talk with someone who understands. For more than two centuries, our people have served as trusted advisors to Rhode Islanders. In today’s technology-driven world, we believe human interaction and expert guidance are more important than ever. Have questions about Cash Management or Small Business Banking? Call Mike Clarkin at 401-654-4827.