While The City has leased some hotels for use housing the homeless and first responders affected by coronavirus, that has not been enough to restore the jobs of many hotel workers. (Kevin N. Hume/S.F. Examiner)

Long slow recovery ahead for hotel industry

Around 15,000 workers furloughed or laid off due to halt in tourism, conventions

The majority of San Francisco’s hotels remain closed, with about 15,000 workers laid off or on furlough, awaiting lifting of shelter-in-place restrictions and a slow return to normalcy.

That return, however, could take several years, according to some in the industry.

Kevin Carroll, president and CEO of the San Francisco Hotel Council, said he expects the local industry to make a full recovery eventually, but he doesn’t know when it will be. While financial stress has let up for a select few hotels with guests, Carroll said the industry won’t be saved until tourists and conventions are back in the picture.

“We are predicting that it’s going to be a slower recovery, because even if people are able to travel, when will people be making decisions to travel again?” Carroll said. “We don’t believe it’s going to be a situation where immediately …. our occupancies are going to be back to where they were. It’s going to be a longer recovery.”

Hotels in San Francisco employ about 20,000 people, as well as provide patrons for nearby small businesses and city revenue from a hotel tax, which typically generates $375 million in revenue annually. This year, that revenue is projected to fall $240 million short.

Without tourists and conventions, hotels have gone from 85% occupancy, pre-COVID-19, to below 5%, according to Unite Here Local 2, the union chapter representing 75% of hotel workers in San Francisco.

The hotel industry has an unusual ability to weather economic recessions, according to Unite Here Local 2 Director of Research Ian Lewis.

“The hotel industry has a very flexible cost structure,” he said. “When there isn’t business, workers don’t work, so their operating costs drop way back.”

However that means the real suffering has shifted onto employees living paycheck to paycheck.

Although San Francisco has contracted with some individual hotels to serve some essential workers and unhoused people, the effort is like a Band-Aid on a gaping wound

With fewer guest services being offered, employment opportunities for hotel workers remain limited.

Unite Here Local 2 has negotiated with employers to continue health insurance through the end of July for laid-off workers, but it is unclear what will happen beyond that, as the industry is projected to take possibly three years to recover, according to Lewis.

Joanne Liu, 53, worked as a housekeeper at Marriott’s St. Regis for 13 years before being furloughed on March 16. She and her husband have been stretching their unemployment checks to cover themselves and their two daughters, one in high school, the other attending San Francisco State University.

But she worries about what will happen after July 31, when her health insurance ends, because her husband and youngest daughter have special medical needs. With no savings and every cent coming in supporting her family, Liu is desperate to get back to work.

“I can’t find a job,” Liu said. ” My job is working for the hotel. All the hotels are closed.”

Liu is staying home, taking care of her youngest daughter, who is struggling after the death of her best friend. Liu, who said her daughter won’t leave her room or talk to anyone, has sought advice from mental health specialists.

With her husband dealing with a liver condition that requires medication every day and checkups every three months, Liu is scared she won’t be able to afford the care her family needs to survive.

When most hotels do reopen, they will have to meet strict guidelines designed to keep guests and workers free from infection. They include stringent daily cleaning of common areas and guest rooms, temperature screenings of guests and workers, physical distancing and testing for employees, and revised food and room service practices.

When the time comes to reopen, the union stresses that employers must hire sufficient staff to meet the new standards. Failure to do so could do significant long-term damage to the reputation and health of the hotel industry.

“I think we’ll see different employers doing different things,” Lewis said. “Where they can get away with it, they will always try to cut corners and have one person doing the work of four. Workers suffer and guests suffer as a result. That’s a very shortsighted view and I hope not too many employers try to do that.”

Liu, who cannot afford to wait to participate in the reopening, said, “My job is cleaning the room, so I want to clean the room and keep the guests safe to come to stay in the hotel, and welcome all the guests back to The City to stay.”

It’s unclear how many San Francisco hotels have applied for Paycheck Protection Program or Economic Injury Disaster Loans, but a national survey by the American Hotel & Lodging Association showed that 95% of respondents had applied for one or the other. Seventy-nine percent of applicants were approved for one or both, but more than half of those receiving aid said the loan amount wasn’t enough to rehire staff.

“We haven’t heard of many in San Francisco getting PPP,” Lewis said. “It wasn’t obvious when it was first passed, but it quickly became true that they would have to put people back on payroll in order to take advantage of PPP. The calculus for the hotel owners …. was that it wasn’t worth it, especially given the public scrutiny that came down on multi-million or multi-billion dollar companies getting the bailout ostensibly designed for small businesses.”

mgorelick@sfexaminer.com

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