Robert Reed is a corporate executive, but over the weekend he worked the front desk of one of his company’s hotels in the Richmond area.
That’s the way it goes in one of the industries hit hardest by the COVID-19 pandemic and slowest to recover, especially hotels that rely on business travel and conventions instead of people frolicking on the beach.
Even when hotels have demand for rooms, they don’t always have people to clean them, run the front desk or serve food to guests.
“Staffing is the number one issue,” said Reed, vice president of SMI Hotel Group, based in Richmond with four hotels in the region and two in Texas. “Owners are in the trenches. Management people are in the trenches.”
The hotel industry is making a slow comeback in Virginia after shedding more than 16,000 jobs when the pandemic shut down business 16 months ago. That was almost one-third of the workforce — and only 3,700 of those positions have been refilled, according to the American Hotel and Lodging Association.
“It’s still a painful time for the hotel industry,” said Eric Terry, president of the Virginia Restaurant, Lodging and Travel Association, which is lobbying for government relief for industries that support the state’s tourism business.
Rebuilding the labor force and promoting their business are the top priorities for a lodging industry that is looking for help from federal, state and even local governments until travel returns, especially during the weekdays when corporate and government travel no longer pay the bills.
Few business travelers
“There are very, very, very few individual business travelers,” said Mark Yardis, vice president of operations at Shamin Hotels, which operates 34 hotels in Richmond and the rest of the central Virginia region.
Tourist travel has begun to recover in Williamsburg, but the Colonial Williamsburg Foundation is not reopening the Woodlands Hotel and Suites — one of its three signature lodging properties — because it doesn’t have the employees.
“Like other hospitality operations across the country, we are experiencing staffing shortages affecting our hotels,” said Kevin Crossett, director of corporate affairs at the foundation. “While we have redoubled our recruiting efforts, the Woodlands Hotel and Suites remains closed until further notice for this reason.”
Sen. Mark Warner, D-Va., a businessman who is trying to negotiate emergency relief for businesses ranging from hotels and restaurants to minor league baseball franchises, said Virginia’s service industries may never be the same as they were before the pandemic.
“I think there are just a lot of people who were in the service industry who got out and I’m not sure they’re going to come back,” Warner said in an interview on Friday.
He supports a proposal by Gov. Ralph Northam and General Assembly leaders to devote $353 million of the $4.3 billion in emergency federal aid under the American Rescue Plan Act to help Virginia’s tourism industry, including hotels and restaurants. He also supports efforts by local governments to help those industries with the nearly $3 billion they have received, as Fairfax and Loudoun counties did with a combined $34 million for the beleaguered hospitality industries.
However, Warner has his plate full with a $974 billion infrastructure bill coming before Congress as early as Monday, to be followed by a $3.5 trillion package being pushed by Democrats and President Joe Biden on a wide range of progressive priorities.
“It doesn’t feel like there is appetite for additional federal COVID-related relief at this point,” he said.
The labor shortage is expected to ease after Labor Day, when children return to school and emergency federal unemployment aid ends, but the union for hotel workers in Northern Virginia and Williamsburg, two of the areas hit hardest by the pandemic, said getting employees back on the job is easier for employers who offer good wages and generous benefits.
“We’re not seeing hesitancy to come back to work by our members,” said Benjy Cannon, spokesman for Unite Here Local 25, which represents about 2,000 hotel workers in Northern Virginia and Williamsburg. “Our members want to go back to jobs they generally like.”
In Northern Virginia’s once-dominant hotel market, the loss of business travel early to midweek also has made it harder to lure back workers who are receiving a $300 weekly unemployment benefit, on top of traditional state benefits. Only one-quarter of the union’s members laid off in Northern Virginia have been called back to work, Cannon said. “It’s just lack of demand.”
Northern Virginia hoteliers say they struggle to meet the existing demand without more employees, but acknowledge that bringing people back is harder if they aren’t guaranteed a full week of work.
“Now we’re seeing a slight lift in our occupancy, but we don’t have employees in our hotels to take care of them,” said Thomas Penny, president of Donohue Hospitality Services, which operates 16 hotels, including four in Northern Virginia.
“They only want to come back if they work four to five days,” Penny said. “They don’t want to come back for two days of work.”
Northern Virginia’s hotel industry has been king of the hill in Virginia, led by Arlington County, where three of Donohue’s hotels operate. COVID-19 changed that by shutting down federal government offices, at least to outside visitors, and choking off business travel related to government.
“Business and government travel for Northern Virginia is the entree on the plate,” Penny said. “Leisure visiting is the starch. We’re having to make a meal out of mashed potatoes.”
Last month, hotel occupancy is Arlington was 44.7%, with revenue per available room at $53.97. The national average was 66.1% in June, with revenue per available room at $85.31 — more than $30 higher. The average for Virginia was 63.9% occupancy and $71.42 per room.
“I hate to say it, but we’ve really seen the tide go out and not come back in,” said Mark Carrier, president of B.F. Saul Hospitality Group, which operates 14 hotels in Northern Virginia, including three in Arlington.
Williamsburg was the hardest-hit hotel market in Virginia early in the pandemic, with a 90% loss of revenue in April 2020, and an occupancy rate of 21.2% and revenue per available room of just $15.37 in June 2020.
Business had been booming in the first quarter of 2020, said Ron Kirkland, executive director of the Williamsburg Hotel & Motel Association. “Then, kapow! The pandemic.”
Now, revenue is back up, bolstered by higher rates that pent-up travelers are willing to pay, Kirkland said. “I’m pretty optimistic for the rest of summer.”
Room occupancy is still relatively low, at 59% in June, but revenue per available room was $83.34, just under the national average and far ahead of Northern Virginia, especially Arlington, Alexandria and Tysons Corner in Fairfax County, which are usually the state leaders.
“We’ve never beaten Northern Virginia in anything, ever,” Kirkland said. “So it’s a new thing.”
In the Richmond area, the outlook is buoyed by a diverse economy and a sports tourism industry that didn’t completely stop for the pandemic, with 50 tournaments in the last half of 2020 and 150 scheduled for this year, said Jack Berry, president of Richmond Region Tourism.
“They have just saved the day, particularly on weekend business,” said Berry, whose organization is one of 113 local destination marketing organizations that would receive money from Northam’s proposed tourism aid package.
The Richmond and Petersburg region had a hotel occupancy rate of 63.9% in June, which was the state average, but at $57.80 it was well below the $85.31 national average of revenue per available room and the state average of $71.42.
Berry’s organization breaks down the data differently than the industry does for parts of the region, with occupancy lowest in Richmond, at 52%. However, city hotels had revenue per available room of $69.45, higher than every part of the region except Hanover County.
“Definitely the business is coming back, but it mainly has been on the weekends,” said John Cario, general manager of the Hilton Richmond Downtown. “We’re still fighting for every piece of business midweek, because we just don’t have it.”
Like other hoteliers, Cario is focused primarily on hiring, training and keeping employees. Two years ago, when 80% of the hotel’s rooms were occupied, the Hilton employed 130 people. Now, it employs 60 people, with 30 open positions that he hasn’t been able to fill.
“That’s our number one challenge,” he said.
The challenge is the same at the hotels that Robert Reed oversees for SMI in the Richmond area. Those include The Commonwealth hotel, next to Capitol Square in downtown Richmond; and Delta Hotels by Marriott Richmond Downtown, perched next to the Downtown Expressway on Canal Street. The company also runs Four Points by Sheraton Richmond in Chesterfield County and the Four Points by Sheraton Richmond Airport in Henrico County.
The Commonwealth has 59 suites that are almost always full, even though it overlooks a state Capitol that has been closed during most of the pandemic, with the General Assembly meeting online or elsewhere since Northam declared a state of emergency in March 2020.
However, Reed said he can’t always fill all of the rooms because he doesn’t have staff.
“We don’t have enough employees to clean all of the rooms,” he said. “We don’t have enough employees to serve all of our food and beverage options.”
Reed said the enhanced federal unemployment benefit has played a part in the staffing challenge. In Texas, where the company operates two hotels, the state ended the federal benefit in late June.
“Now, I can count on one hand the number of job openings we have in my hotel in downtown Dallas,” he said.
At the same time, Reed said he understands why many former and potential employees want to wait until Labor Day, when school resumes and they don’t have to pay for child care while they work.
“Economically for these individuals, it makes sense for them,” he said.
The other challenge is the return of the business traveler, conventions and small group meetings, which are particularly important to the Delta, formerly a Crowne Plaza hotel, near the central business district in downtown Richmond.
“We relied on the meeting business and the food and beverage business,” Reed said. “There has been a huge revenue hit to the Delta, and there continues to be.”
Leisure travel has been a lifeline for hotels across Virginia. Hotel occupancy and revenue are particularly strong in Virginia Beach, where Shamin Hotels operates five hotels.
“Since Memorial Day, the occupancy has been very strong for leisure visitors,” said Yardis, the vice president for operations for Chesterfield-based Shamin Hotels, the Richmond region’s largest hotel operator. “However, I can count on one hand the number of individual business visitors we see.”
Shamin’s hotels near the Richmond airport typically rely on business travelers for 60% of their business, but now they’re depending primarily on leisure travelers.
At the airport itself, passenger traffic is recovering after being cut by two-thirds during the pandemic. Air travel has been building steadily since March, as more people were vaccinated against COVID-19. Passenger traffic was 80% of its normal level in June, said Troy Bell, director of marketing at the airport.
After plunging from almost 4.4 million passengers in 2019 to 1.7 million a year later, the airport has handled 1.2 million passengers in the first half of this year, Bell said. “If things just hold steady, we will be well over 3 million this year.”
“Business travel should start to pick up after Labor Day,” he said.
Berry, who has spent a career “putting heads in beds” in Richmond-area hotels, said the industry expects the return of meetings and conventions in 2022, but not business travel until 2023.
“All in all, you can’t find a hotel room every night on weekends,” he said, “but you can on Monday, Tuesday and Wednesday.”
This story has been updated to correct the June occupancy rate for Richmond hotels.