The owner of the Rittenhouse Hotel and other Philadelphia hotels is looking to government agencies and police departments to lease space at its properties, as it joins other lodging groups seeking a financial lifeline from responders to the coronavirus crisis that has wrecked their business.
Hersha Hospitality Trust is “seeking alternative sources of hotel revenue through government agencies, law enforcement, and military personnel, and universities,” the Philadelphia-based company said in a release this week.
- Rents dip at Philly area’s newest big apartments, as coronavirus pandemic thwarts lease-ups
- Philly landlords face slim returns from retail tenants as first rents of coronavirus pandemic era come due
- Coronavirus layoffs are hitting hotel, restaurant, and nonprofit workers hard: ‘It’s total annihilation’
Hersha also owns the Westin Philadelphia in Center City’s Liberty Place high-rise complex and the Hampton Inn Philadelphia Center City-Convention Center. To keep the lights on at otherwise emptied properties, it and other hotel operators are recasting their guest rooms as barracks for work-fatigued doctors and nurses, and overflow wards for coronavirus-swamped hospitals.
“There’s no other demand,” said Ed Grose, executive director of the Greater Philadelphia Hotel Association. “It’s their only option. If no one is traveling, that’s pretty much it.”
The stay-at-home orders that have been issued throughout much of the country to stem the virus’ spread have severely restricted business and personal travel, leading to the cancellation of conferences and a halt to tourism.
The consequences for the hospitality industry have been devastating: Almost four million employees who work in or for the hotels are projected to lose their jobs in the coming weeks, or had already been furloughed by the end of March, according the American Hotel & Lodging Association, the industry’s largest trade group.
Those numbers include 105,340 job losses in Pennsylvania, about 45% of the state’s total hotel-supported workforce.
Hotel owners like Hersha “are currently operating in a climate of extreme uncertainty,” analysts with the Bank of Montreal’s BMO Capital Markets unit wrote in a research report this week.
So hotel owners are turning to government agencies, hospitals, and other organizations that need space for pandemic response.
In Chicago, Mayor Lori Lightfoot announced a plan late last month to rent thousands of hotel rooms to quarantine patients infected with the illness and other coronavirus-related purposes.
Up to 1,100 of those rooms will be at five properties owned or operated by Chicago-based Oxford Hotels & Resorts, which signed on to house and feed first responders and people requiring isolation, the Chicago Tribune reported.
California, meanwhile, is getting a cash grant from the Federal Emergency Management Agency for a plan to secure up to 15,000 hotel rooms for tens of thousands of people now in homeless shelters and encampments, where the virus can easily spread, Gov. Gavin Newsom announced last week.
In Los Angeles, officials told the Los Angeles Times that they aim to separately secure an additional 15,000 guest rooms at dozens of hotels to house members of that city’s homeless population. A hotel on the outskirts of the upscale Century City district that charged almost $400 a night in better times was among the first properties to take check-ins under the program.
And in New York, which has seen more confirmed cases of the virus than any other U.S. city, officials have secured 10,000 beds in 20 hotels to ease hospital loads by providing medically supervised housing to coronavirus patients who don’t require intensive treatment, Mitchell Katz, chief executive of New York’s city-run hospital system, said during a new conference with Mayor Bill de Blasio last week.
“I’m very, very sorry for what the hotel industry has been through in this crisis," de Blasio said. "But what it has meant at the same time is a huge number of hotels have become available. We can go in and lease an entire hotel building and we can do that dozens and dozens and dozens of times until we get to the point that we have all the beds we need.”
In Philadelphia, Managing Director Brian Abernathy said Thursday that the city is close to signing leases with five hotels, in addition to its deal with the Holiday Inn Express in Center City, which is being used to house homeless people who test positive for the virus.
The city hopes to have a total of 750 hotel rooms available for quarantine and isolation space, Abernathy said. That would equate to about 6% of the city’s total guest-room inventory.
Other hotels are already being heavily used — in one case through an act of charity — by medical crews and first responders who are either pulling long shifts at nearby hospitals or who want to steer clear of family members at home after potential exposure.
In West Philadelphia, rooms at the Inn at Penn and at the Sheraton Philadelphia University City have been booked by Penn Medicine, the University of Pennsylvania’s hospital and research arm, to house staffers at nearby hospital buildings involved in the coronavirus response, the hotel association’s Grose said. Penn owns those hotel properties.
Elsewhere in University City, Campus Apartments LLC has been providing free guest rooms at its Homewood Suites by Hilton hotel to medical personnel and other emergency crews involved in the response to the health crisis.
Doctors and nurses at Penn, Children’s Hospital, and Jefferson University are currently staying at the property, Campus Apartments chief executive David Adelman said.
“We want to support our neighbors and those on the front lines at [area hospitals] in any way possible during this unprecedented time,” Adelman said.
Hersha Hospitality chief executive Jay H. Shah said his company has room bookings with responders and health-care providers in Philadelphia, but that it’s working more intensively with organizations and agencies in other cities where it has a presence, such as New York and Miami.
The company has not been approached about housing patients, Shah said.
Hersha’s plan to seek business from pandemic responders was presented in its statement this week as one in a series of actions to mitigate the pandemic’s impact on its business.
It also increased its borrowing capacity by $100 million, negotiated a year of waivers on its financial-performance benchmarks with lenders, known as “covenants," and canceled agreements with outside venders and service providers.
The company said it has already closed 19 of its 48 hotels across the country, reducing its on-property staff by 80%. In Philadelphia, only its Hampton Inn property was taking reservations for upcoming weeks.
“Demand for rooms, even for responders and health-care providers, appears to be shallow,” Shah said. “But we are here to support.”