Hotels feel the hit of shutdowns

The economic storm brought by state efforts to stop the spread of COVID-19 has hit the hotel industry hard, but owners and managers say they still hope to salvage the summer season.

Hotels were at first deemed an essential business that could remain open, but on March 22, Gov. John Carney modified his emergency order, requiring Delawareans to shelter in place and restricting out-of-state travelers. On April 6, Carney closed hotels to leisure guests, with only essential guests allowed to stay. Essential guests are defined as workers at an essential business, caretakers, government workers, domestic violence victims, hotel staff, travelers confined by travel restrictions in their home state, fire or disaster victims and people complying with a court order. 

Charles Bryant, general manager of Quality Inn and Suites in Rehoboth Beach, said the changes were a big adjustment, mainly because they came so fast. He said the effect was felt immediately, as the coronavirus started to move across Delaware on St. Patrick’s Day weekend. During that weekend, Bryant said, 75 reservations were canceled, along with group travel.

The next week, Bryant said, the hotel tried to stay open, but it was at 8 percent occupancy.

“That’s not enough to keep the lights on,” he said. 

The following week, the hotel closed to the public, but remains open for medical personnel who may need lodging. Bryant said 15 employees have been furloughed; he said he intends to hire them back when life goes back to something resembling normalcy. 

Benjamin Gray, general manager of the Bellmoor in Rehoboth, said the hotel is officially closed until further notice. He said reservations will not be taken until May 15. However, he said, the hotel is still receiving inquiries about summer reservations, indicating that guests are still hopeful they will continue their summertime traditions. 

“It's definitely been a challenge and has caused a dramatic loss in revenue. We continue to receive cancellations to this day,” Gray said. “We have resorted to limited staffing in an effort to be responsive and communicative to inbound requests and inquiries.”

Vince DiFonzo, a partner at TKO Hospitality, which owns Hyatt Place in Dewey Beach, said bookings for the summer have slowed considerably. Cancellations have mainly been in the short term, within a month out, he said. 

TKO Hospitality manages nine hotels, seven in the Delmarva area, in Dewey and Ocean City. 

“We have had to close a few of the properties due to this crisis. Business is minimal,” DiFonzo said. While he understands the restrictions, it makes it extremely difficult to survive as a business, he said.

“We are trying to employ some of our team members to do projects within the hotels and deep cleaning. We’ve also sent our laid off associates online, continuing educational training and certifications to keep them engaged,” DiFonzo said. “We have had to furlough and lay off a good amount of team members. This has been extremely hard and emotional. It hasn’t been easy.”

DiFonzo said TKO’s hotels still have some out-of-town guests, as these people are on extended stays and checked in several weeks ago. But out-of-towners are not getting keys with the new travel restrictions, as only essential guests are able to stay at this point, he said.

Chad Moore, owner of the Admiral and Oceanus hotels in Rehoboth and the Microtel Hotel in Georgetown, said his Rehoboth hotels had not yet opened when the shutdowns went into effect, but some essential workers are staying at the Microtel. He said the Microtel is shut down to short-term and out-of-town guests; the workers are from a company that has a long-term contract for its employees to stay at the hotel.

Moore said reservations are still being taken over the phone, but many of the Rehoboth hotels’ stays are reserved on an in-person basis. While the shutdowns have been tough, he understands why they had to be done.

“It’s a bitter pill to swallow now, but if we do what we need to do now, we hit the peak, and we can salvage the summer out of this,” Moore said. “Eighty percent of our business is in two or three months. If we miss the summer, it will be a long winter.”

According to the Rehoboth Beach-Dewey Beach Chamber of Commerce, for January through March 2019, accommodations were just over 35,000. This year, during the same time frame, occupancy is expected to be just under 9,000. 

Chamber President and CEO Carol Everhart said a silver lining in all this is it happened during the winter and early spring, and not at the busiest time of year in July and August.

“It could have been a lot worse, revenue-wise,” she said.

Bryant agreed with Everhart’s assessment.

“If this had to happen, it's better now than during the busy season,” he said. Bryant added that if the pandemic had struck during the summer, there would be a high-level risk of a mass outbreak incident in Delaware. 

“It’s unfortunate financially, but it’s the right thing to do in terms of public safety and health,” Bryant said. 

Carney’s emergency order and its various modifications also banned short-term rentals.

In the city of Lewes, Mayor Ted Becker said the city has started calling those who have a rental license on file to notify them of the governor’s latest modification. They’re also calling every local realtor to stress the importance of following the order. 

“It’s very, very critical that people adhere to that,” Becker said. 

However, with warm and sunny weather in the forecast for Easter weekend, Becker said, there is worry the city will see an influx of visitors.

“We have pretty high concerns about how many people may show up,” he said. “I think our officers will be on task to monitor that this weekend.” 

During a Lewes Board of Health meeting April 8, Beebe Healthcare’s Director of Marketing & Communications Christina Deidesheimer said it’s very important to continue practicing social distancing and good hygiene. The health community is trying to continue flattening the curve, she said.

“What we want to avoid is that second curve when the weather is warm, and we feel that it's OK to kind of relax,” she said. “What we're urging folks to do is to not to be lulled into a false sense of security.”

For DiFonzo, the current situation is uncharted territory.

“I have been in the hospitality industry for over 30 years.  I was a COO for a company during 9/11 and managed hotels in New York City.  That was very tough and different as it affected the entire nation but had an immediate impact on NYC.  That situation had effects on travel, but things got back to semi-normal within a few months, outside of NYC.  The financial crisis also had a tremendous effect on the hotel industry both from corporate travel and conference cutbacks.”

Still, DiFonzo said, “Nothing has been like this.  The hotel industry experienced an 80 percent decline in occupancy on a national level in a matter of weeks.  The month of April 2020 will likely go down as the worst hotel occupancy month in hotel history.”

DiFonzo and Gray remain optimistic for the future, with plans to bring back employees and welcome guests.

“I believe people will be anxious to travel again and will be ready to visit the beach this summer or when the travel bans are lifted.  There will definitely be changes on how we travel, and capacity in hotels, restaurants and lounges,” DiFonzo said. 

“We have a strong feeling that the market will bounce back quickly and just in time for summer travel. We are focused on the ‘Shelter now, travel later’ and ‘don't cancel, postpone’ messaging and believe that the consumer will embrace that mentality,” Gray said. “When safe travel resumes, we are confident that tourism will continue to be drawn to the Nation's Summer Capital and the unique beauty of the Rehoboth Beach community as a destination.”