If you doubt that the ground is shifting fast in the age of COVID-19, consider Montine McNulty’s evolving view of the effects on restaurant business.
At 10:40 a.m. Friday, she said she’d noticed little effect of a coronavirus-related downturn in restaurants, one of McNulty’s main constituencies as executive director of the Arkansas Hospitality Association.
By 2:50 that afternoon, McNulty was calling back. “I just wanted to tell you I've gotten three calls this afternoon from restaurants that are really suffering and having big problems,” she said. “The smaller the restaurant, the bigger the problems, cash flow wise.”
By Sunday night, all dine-in restaurants and bars were closed in downstate New York and Massachusetts, and a California decree closed all bars and set restaurant seating capacity at 50%.
And on Monday afternoon, President Donald Trump cited new official guidance for Americans to avoid travel, avoid restaurants and bars and shun meetings with more than 10 people. By Tuesday morning, the city of Fayetteville had restricted all restaurants and bars to 50 percent of capacity.
On Tuesday, with the number of Arkansas COVID-19 cases holding at 22 but expected to rise, Gov. Asa Hutchinson ordered the state's casinos closed for two weeks. The state's casinos are in Pine Bluff, at Oaklawn Racing Casino Resort in Hot Springs and Southland Casino Racing in West Memphis. The Pine Bluff and West Memphis gambling halls had already announced closures.
“This gives us an opportunity to evaluate where we are," Hutchinson said.
Despite a trend elsewhere, Arkansas has not ordered bars and restaurants to close, but tourism, the state's second-largest industry at about $7.4 billion in economic impact last year, faced a deepening crisis. Industry officials were hoping to influence an economic aid package being shaped in Washington as the Little Rock Convention & Visitors Bureau revealed that at least 21 planned events through early May had been canceled.
Confirmed coronavirus cases in the U.S. reached 5,000 and 94 Americans had died as of Tuesday afternoon. Worldwide cases had topped 194,000 with nearly 8,000 deaths, and parts of the U.S. are in lockdown, with schools, eateries and gyms closed.
Little Rock Mayor Frank Scott Jr. declared a city curfew Monday from midnight to 5 a.m., essentially making nightlife after midnight illegal. The curfew won't apply to people working overnight hours, he said. The mayor also called for the cancellation of all gatherings of 50 people or more, all toward the goal of "social distancing."
At market close Monday, a shaken stock market had plummeted again, with the Dow Jones Industrial Average down 2,997 points, or 12.9%, in its second worst day of trading ever. On Tuesday, the Dow regained a third of what it had lost the day before, but markets remained volatile.
Restaurants were in a crisis, and McNulty was sounding the alarm, pleading for help for both restaurants and hotels, her other big constituency:
“This economic impact speaks to the urgency and severe crisis of our hotel industry. Help is needed!” said McNulty, who is also CEO of the trade group. (Full statement below.)
Gretchen Hall, executive director of the Little Rock Convention & Visitors Bureau, reported that 21 events planned in Little Rock had been canceled and 29 gatherings postponed for rescheduling. All had originally been planned from March 12 to the first week of May, she said.
"Our situation is very fluid as our sales and operations teams work diligently to reschedule and accommodate all necessary events utilizing our facilities," Hall told Arkansas Business.
Several other organizations planning events have inquired "about possible alternative dates but have yet to make an official decision," Hall said.
Chick-fil-A Inc., which has dozens of locations in Arkansas, was one of many restaurants announcing the closing of its dining rooms, planning instead to sell food for pickup either inside stores or through drive-through windows. Irianna's Pizza in downtown Little Rock, among others, is also closed for dining, and new waves of closings were coming almost hourly Monday.
McNulty said cleaning crews were doubling down on sanitation, for the health of guests and employees. The hospitality industry follows protocols in confronting pathogens from the common cold to the flu, updating to stay aligned with the guidance from the Federal Centers for Disease Control, McNulty said.
Some hospitality companies are offering more hand sanitizer stations, she added, cleaning guest rooms more frequently and putting more alcohol in cleaning products, at least 60%, and laundry temperatures have been ramped up to 120 degrees. Alcohol and high temperatures kill the virus.
The disease is not food-borne, but the risk in restaurants would be touching infected surfaces or sitting near a coughing or sneezing person with the virus, experts said.
“The escalating public health crisis around COVID-19 and the evolving situation is an unpreceded and dramatic economic crisis that is affecting our employers and employees right now,” McNulty said.
Companies are honoring cancellations across the board, she said, urging travelers with changes to consult their brands’ websites. The U.S. hotel industry employs 8.3 million people directly and indirectly, the association says, serving 1.3 billion guests a year.
McNulty, working from industry talking points, said the industry needs swift action from the White House and Congress, including ensuring that small business have access to capital, credit and liquidity needed to survive and meet payroll, as well as debt forbearance and a stimulus package to support businesses and employees.
The novel coronavirus, which originated in Wuhan, China, and has proven deadly in Italy and elsewhere, takes a greater toll on the elderly and chronically ill, but has also killed healthy young people in some cases. Overall, about 80 percent of patients get well on their own without major complications, and a small fraction are actually hospitalized. Still, the virus can also be spread by people who are infected but have only mild symptoms or none at all, the CDC said.
An experimental vaccine against the virus began preliminary testing Monday in Washington State. Any effective vaccine would be a game-changer in fighting the global pandemic, health officials said.
AHA Full Statement on COVID-19
March 12, 2020
ECONOMIC IMPACT OF COVID-19 ON INDUSTRY & EMPLOYEES
Hotels are more than the four walls of a building, we are about people. We are a business of people serving people.
The 8.3 million people we directly employ and indirectly employ and support.
The 1.3 billion guests who stay in America’s hotels each year.
There are hotels in every single congressional district in the country, which contribute more than $660 billion to the U.S. economy
Many of the hotels around the country are mom and pop hotels.
They are hotels operated by first and second-generation Americans, who have moved to this country to fulfill the American dream and to provide a new and better life for their families.
Through hard work and dedication, they have found a career operating a hotel through the franchise model.
They represent 61% of our industry, or 33,000 hotels.
The health and safety of our associates and our guests has been and continues to the top priority for the hotel industry.
Hotels have long followed public health best practices, which include daily cleaning of guestrooms and public spaces, and providing sanitary solution to guests and employees.
We have enhanced these protocols during this health crisis, adhering to CDC and state and local health organization guidelines to ensure our health of our associates and guests during this health crisis.
In our industry, hotels have protocols in place to deal with everything from the common cold to the flu, and we continually update these protocols to stay aligned with the latest CDC guidance.
Some specific examples that you or may not see include an increased presence of hand sanitizer stations, increased frequency of guest room cleanings, increased alcohol content in cleaning materials (with a minimum of 60% alcohol), a minimum of 120 degrees for laundry among other protocols.
Hotels are taking measures to keep guests informed and manage reservations.
Brands globally are broadly honoring guest cancelations and guests can find more information on their websites.
Companies aim to provide guests with the level of service that is required so that they can manage bookings and plan around these unforeseen circumstances
The escalating public health crisis around COVID-19 and the evolving situation is an unpreceded and dramatic economic crisis that is affecting our employers and employees right now.
While no one knows exactly how long this this public health situation will last, what we do know is that the impact to our industry is already more severe than anything we’ve seen before.
The greatest impact will be to our employees, and to our small business owners.
In certain markets, including Seattle, San Francisco, Austin and Boston, occupancy rates are down more than 40 percent.
When occupancy drops this low, small businesses are operating in a negative cash flow position, meaning that these small businesses are not bringing in enough money via room revenue to cover their financial obligations, the two largest being their payroll / benefits and their mortgage.
In the best-case scenario, a loss of 4.5 points in occupancy and a 15% decline in revenue, the industry is projected to have a negative cash flow after expenses and debt. This means that hotels would be unable to fund operating expenses, including labor, and debt payments to lenders.
In reality, we are seeing likely revenue declines of closer to 20% in many markets.
Already, many of our members are facing difficult decisions as they see significant declines in bookings, as well as a steady clip of cancellations of their meetings and events business.
Some industry analysts have shared with us that hotels are losing up to $100 million per day in room revenue alone, which does not account for the additional revenue generated through meetings and events and food and beverage.
The impact will also be felt in our communities. Guests spend $550 billion in hotels and the communities while they’re traveling, from restaurants to retail.
Hotels generate $186 billion in taxes, which go back into communities
There is no doubt that the decision to suspend most air travel to and from Europe will exacerbate the negative impacts on U.S. hoteliers and the much-needed community spend that comes from the traveling public.
The White House and Congress can take urgent action to provide immediate relief to help our small business owners keep their doors open.
Congress must ensure that small businesses have access to capital, credit and liquidity necessary to meet their payroll and debt payments.
We need immediate action by the White House and Treasury to give small business owners access to capital and debt forbearance.
A stimulus package from Congress that supports both businesses and employees.