About 1 in 4 workers in hotel-supported jobs in Hawaii could lose their jobs in the next six months as the COVID-19 pandemic attacks the health of the state’s tourist economy.
The dire projection comes from the American Hotel and Lodging Association’s latest Oxford Economics study, which conservatively estimates 46,778 hotel- supported jobs in Hawaii could be lost over the next six months, with a worst-case scenario of 57,173 jobs.
That’s roughly 20% to 26% of the 216,000 tourism-supported jobs that Hawaii Tourism Authority (HTA) reported at the end of 2019, which with 10.4 million visitors and $17.75 billion in nominal spending was another boom year.
Kekoa McClellan, AHLA’s Hawaii representative, said, “We’re in survival mode. This is the most challenging economic time that our industry has ever faced. This is far worse than 9/11, SARS, MERS or the Great Recession. To find an example of a similar condition, you’d have to go back to WWII.”
“Because Hawaii has doubled-down on the tourism industry and we’ve done so well… we’ll be disproportionately affected. The unemployment rate will dramatically increase,” McClellan said.
It’s been a rapid deterioration. Hawaii’s visitor industry and hotels posted strong January results with only the beginning of a wobble in February. Hawaii hotels in February saw occupancy rise 1.2 percentage points to 84.7%, and the average daily rate grew more than 6% to $310, according to the February Hawaii Hotel Performance Report released by the HTA Wednesday, using data from STR.
But that’s all but evaporated with the spread of the COVID-19 pandemic. On Tuesday, Hawaii Gov. David Ige took the unprecedented step of “strongly encouraging” visitors not to come to Hawaii for the next 30 days. Ige also recommended that visitor attractions, bars, clubs and restaurant dining rooms close for 30 days. Some local counties took even stricter COVID-19 containment steps Wednesday.
“Today, they are seeing occupancy of 10% to 12% across the country and in Hawaii, where a month ago Waikiki hotels were easily over 80% occupancy,” McClellan said. “With occupancy that low, already 90% of staff are not showing up to work.”
The state Department of Labor and Industrial Relations reports a steep rise in weekly unemployment claims which from Sunday to Tuesday had already hit 4,829. That’s up from 1,292 last week and 798 during the first week of March. The last week of February weekly unemployment claims were just 639.
It’s still early days but hundreds of union hotel workers already are requesting assistance because of layoffs and reduced hours, said Bryant de Venecia, a spokesman for Unite Here Local 5, a labor union representing approximately 11,500 Hawaii workers in the hospitality, health care and food service industries
“We used to see one or two workers coming in for unemployment daily, but there’s been an upsurge of 20 to 30 every day and it’s still growing,” de Venecia said.
During the first week of March, de Venecia said some full-time tourism employees already had begun to see their hours cut to two days or sometimes to none at all.
“Some of them haven’t received official notices that they are being laid off, but they aren’t getting any hours,” he said. “A lot of Marriott workers have received notices that they were either laid off temporarily or their hours had been cut. We don’t have any numbers from Hilton yet, but they are making cuts in different departments.”
McClellan said AHLA is working with HTA, federal, state and local governments to bring relief to the industry so more employers can take care of their workers. Earlier this week, the national association asked the Trump Administration for a $100 billion relief fund for hotel workers. McClellan said local discussions range from advocating to improve near-term cash flow and liquidity to seeking tax holidays and deferrals to shoring up employees, whose pain would be felt throughout the greater economy.
McClellan said what’s not being discussed is promoting kamaaina staycations and island hops — a strategy that Hawaii’s visitor industry has used to bolster traffic in nearly every other downturn. While deals are still out there, COVID-19 has made the strategy a lot more complicated and controversial.
“The notion that local people will have surplus income to go to a hotel is a red herring,” McClellan said. “We applaud the Governor’s decision to collapse the visitor industry for a short period of time in order to insure that when consumer confidence returns Hawaii is a destination of choice.”