The 818-room Hale Koa Hotel, which sits on 72 prime acres of Waikiki oceanfront and employs 596 workers, will close through April 15 — the latest hotel property moving toward shutdown amid the realities of COVID-19.
“A lot of on-call workers aren’t getting any hours, but Hale Koa isn’t doing any layoffs,” Unite Here Local 5 spokesman Bryant de Venecia said. “This was better news than we were expecting. At least for 3-1/2 weeks, people will keep medical.”
The property is part of the Armed Forces Recreation Centers (AFRC) Resorts and serves current and retired members of the U.S. armed forces, their families and other authorized users.
“We’re getting the current guests out. As they come up on the end of their stay, they are exiting, and we aren’t taking any new guests,” said Hale Koa spokesman James Guzior.
Guzior said it was hard to say when the hotel would completely close because “there are soldiers in there that also are on stop move because of the DOD, the federal government, they can’t move. They can’t go anywhere. I don’t know if we’ll ever have 100% clearage out of the hotel, but that’s the goal. We’re trying to do that right now for safety.”
The fact that the hotel still has some occupancy means the situation there isn’t yet as dire as workers face at other properties. De Venecia said the union’s full-time workers have been guaranteed 39 hours and its part-time workers 20 hours through April 16.
With COVID-19 directives ramping up and demand dropping, some already have closed blocks of rooms, floors and towers and are moving toward broader shutdowns. While workers already have lost enough hours to crash the state’s unemployment system, the hotel sector is just at the start of a coming wave of layoffs projected to cost tens of thousands of jobs.
The harms cannot be minimized, said Ben Rafter, OLS Hotels & Resorts CEO. Rafter said he has seen forecasts that suggest 1 in 4 Hawaii hotel-supported jobs will be lost in the next six months, but he thinks the ratio will be more like 3 out of 4 as the situation evolves.
“We can learn from other markets like San Francisco and Manhattan that have gone through this before us,” Rafter said. “San Francisco has closed about half of their hotels, and about 100 hotels in Manhattan already have closed. Those that think that Hawaii will only have one-quarter of our (hotel-supported) job base lost or one or two hotels closing would be taking the most wildly optimistic view of things.”
OLS hotels in the Hawaiian Islands still are open, but Rafter said he, along with every other hotelier, is running models to determine whether it’s better to close.
“We’re all trying to get our employees as many hours as possible,” he said. “I would guess the threshold to consider closure for most is sustained weeks of 15% to 20% occupancy.”
Kekoa McClellan, the American Hotel and Lodging Association’s Hawaii representative, said hotels across Hawaii are mobilizing to support the state as they anticipate a “shelter in place” scenario. “Hotels will do their best to consolidate operations where they can. Some will close temporarily,” McClellan said. “We see discussions happening ranging from what hotels can do to support employees to what government can do to support hotels.”
McClellan said the hotel industry met with state officials Friday to convey that “we are in survival mode” and ask for a deferral of real property tax payments due in August and for a tax freeze on real property tax rates.
“The key to beating this thing and the economic impact it will have is our making sure the visitor industry is well capitalized and well resourced,” McClellan said. “The biggest tool in the city’s toolbox lies with the real property tax rate.”
Rafter said hoteliers also are hoping Hawaii’s government officials consider issuing tax credits to hotels that are continuing to pay medical to laid-off workers.
Kelly Sanders, Highgate vice president of operations Hawaii, said, “The devastation caused on all fronts from the pandemic has and is crippling the nation and tourism which has been the backbone of Hawaii for decades is facing its worst downturn in history.”
“We will ask for help so together we can survive, rebuild, and deliver Aloha to the world in the future,” he said. “This will only be possible with support and financial relief from the state and counties and a never before seen rebound marketing plan that will have to come once we understand when it is the right time to move forward.”