Major Resort Hotels on the Brink of Collapse Due to Covid-19

(STL.News) For the majority of 2020, COVID-19 has plagued humankind and influenced nearly every aspect of daily life.  From toilet paper and hand sanitizer shortages to lock-downs and travel restrictions, we’ve all witnessed the impact of the pandemic, at least on an individual level.  However, its effect on tourism, business travel and other travel industries around the world is cause for some serious concern.

Pre-COVID-19, major resort hotels were booming with tourists and one of the most thriving industries worldwide.  The global hotel industry was worth an astounding $570 billion USD in 2019.  That number is estimated to severely decrease this year, as many major hotel chains are being terrorized by global travel restrictions and massive losses in revenue leading to desperation, closures and the need for federal assistance.

According to the American Hotel & Lodging Association (AHLA), “More than 2/3 of hotels (67%) report that they will only be able to last six more months at current projected revenue and occupancy levels absent any further relief.” (source: hospitalitynet.org)

While some hotel chains fear closing their doors, this has already become an unfortunate reality for many hotel locations.  In New York City alone, some of the most prominent hotels are closing their doors for good due to the weight of overdue mortgage payments and sky-high property taxes.  According to the New York Times, recent hotel closures include the 478-room Hilton Times Square, two Courtyard by Marriott hotels in Manhattan, and the 399-room Omni Berkshire Place in Midtown.

They join the long list of NYC’s permanent closures that already include the iconic 42-story Times Square Edition hotel, Hilton Westchester, and W New York Downtown which were shut down this Spring.  A report from The Wall Street Journal suggests that 20 percent of the state’s total hotel supply (about 250,000 rooms) could close permanently.

Running a hotel requires a lot of personnel and with hotel closures of this magnitude, thousands of employees are now left jobless and many more are expected to be laid off before the end of
the year.

“In the latest news, Marriott International plans to let go of 17 percent of its corporate workforce.  According to The New York Times, the company confirmed that it will lay off 673 people in late
October.  Marriott had initially furloughed two-thirds of its corporate staff in March.  In June, the furloughs were extended until early October.  The hotel giant said it does not expect to return to
prior levels of business until beyond 2021.  Effective Sept. 20, Marriott will no longer be listed on the Chicago Stock Exchange, a move the company said would reduce administrative costs and
requirements.” (source: North Star Meetings Group)

While the pandemic has triggered massive closures and layoffs in resort hotels, casino-resort chains have been hit hard as well.  “MGM Resorts has permanently laid off 18,000 positions nationwide, including 10,000 in Las Vegas.  Other Las Vegas casinos and Nevada-based operators have also cut jobs — Treasure Island, Sahara, M Resort, and Boyd Gaming, to name a few.” (source: vegas.eater.com)

Land-based casinos are taking a hit and to make matters even worse, closures of casino halls have led avid players to seek out online casinos instead.  While this will challenge the majority of casino resorts, some are open to online possibilities.  Those who manage to adapt and rise to the top of online casino rankings are in for a world of new opportunities.

Online casinos have poised themselves as a potential saving grace for resort casino chains.  Despite reporting a 91% drop in revenue during the second quarter of his year, due mostly to the coronavirus-induced shut downs nationwide, MGM Resorts received a 10-figure investment from the prominent holding company, InterActive Corp.

“MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online,” said Barry Diller, Chairman of IAC.

MGM isn’t the only reputable casino resort chain to dabble in the online casino world.  “While New Jersey casinos were shut down, Garden State online operators reached record levels of revenue and the state’s most successful online casino, Golden Nugget, recently secured a partnership in Michigan.  The partnership will allow the company to operate in the state when its online gambling market is launched either later this year or early 2021.” (source: cardplayer.com)

While the vast majority of resort hotel chains have ultimately been shattered by the COVID-19 pandemic and the industry as a whole looks to be on the brink of collapse, a few of them have found ways to prosper.  Even with more closures and layoffs expected, there are opportunities to save the industry and those who are bold enough to embrace them will reap the benefits.

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