Ahead of Labor Day, 65% of hotels are operating below break-even point, survey shows

Bookings for Labor Day weekend are down 65%

Millions of hotel employees remain unemployed while travel demand continues to lag far behind normal levels as the U.S. enters month six of the pandemic, according to a recent survey by the American Hotel & Lodging Association (AHLA).

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The association's latest report, released just before a major holiday weekend, underscores the economic and human struggle of the industry, which has been hobbled by lockdown orders and safety restrictions meant to stem the spread of the coronavirus.

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In its findings, AHLA discovered that four out of 10 hotel employees are not working and almost 65% of hotels are operating at or below 50% occupancy. This means more than half of hotels are operating below the break-even point, according to the report.

Guests check in at the Red Rock Resort on June 4, 2020, in Las Vegas, Nevada. (Ethan Miller/Getty Images)

At the same time, consumer travel still remains at an all-time low with just over 30% of Americans traveling overnight since March. Even bookings for Labor Day weekend are down 65% compared to a year ago.

According to the report, urban hotels are taking the biggest hit and "facing collapse with cripplingly low occupancies of 38 percent" which is "significantly" below the national average.

Hotels in major cities throughout the nation continue to be crippled by the virus, which has far-reaching consequences. Not only has the virus resulted in widespread job cuts, but the lack of traffic has "dramatically" reduced state and local tax revenue for 2020 "and beyond," according to the report.

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As a result of the drastic drop in travel demand, experts say the hotels are grappling with one big question: whether to close their doors permanently.

"While hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago," said AHLA CEO Chip Rogers. "Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently."

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Rogers says the industry is also worried about what these prolonged impacts will mean for the industry come fall.

"We're incredibly worried about the fall and what the drop in demand will mean for the industry and the millions of employees we have been unable to bring back," he said. "The job loss will be devasting to our industry, our communities, and the overall American economy."

To date, AHLA reported that just 16% of Americans plan to travel for Labor Day, 25% for Thanksgiving and 29% for Christmas.

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