The deepening downturn in the U.S. lodging industry, caused by plummeting occupancy levels, is resulting in mounting layoffs as hotel chains try to trim operating costs in an effort to stem declining profits.
According to the U.S. Department of Labor, the leisure and hospitality sector shed 1.2 million jobs in 2008 and had an unemployment rate of 9.5 percent, the third highest in the nation, behind only the manufacturing and agricultural industries. Among recent news:
• Bethesda, Md.-based Marriott International, the largest U.S. hotel chain, in delivering its third-quarter earnings report last October said it would be forced to downsize its work force to hold the line on operating costs (numbers had not yet been released at press time).
• Starwood Hotels & Resorts Worldwide, the third-largest U.S. lodging company, made unspecified staffing cuts at its White Plains, N.Y., headquarters and closed three sales centers.
• In December, Parsippany, N.J.-based Wyndham Hotel Group, which includes the Ramada, Days Inn and Super 8 chains, announced it would eliminate roughly 4,000 positions through the first quarter of 2009.
• This January, management at the 721-room Greenbrier resort in White Sulphur Springs, W.Va., described the current resort market as a "harsh environment" and said that because occupancy at the luxury property had dipped to a mere 100 rooms, it was forced to lay off 650 hourly and salaried employees.
• Also in January, in an effort to cut costs, the Walt Disney Co. offered voluntary buyout packages to 600 executives in its domestic theme park and resort divisions.
According to Hendersonville, Tenn.-based Smith Travel Research, hotels finished 2008 with an industrywide occupancy rate of 60.4 percent, 4.2 percent below 2007 levels. And while the average daily rate of $106.55 was 2.4 percent above that of 2007, revenue per available room dipped 1.9 percent. "The industry fell into an extremely negative pattern during the last four months of the year," said Mark Lomanno, who added that STR is not predicting any relief until the second half of 2009.
A recent report released by Atlanta-based PKF Hospitality predicted that revenue per available room will fall by 9.8 percent in 2009, its steepest decline since 2001, and estimated that nearly 20 percent of a sample of 1,500 U.S. hotels it studied will not be able to generate the cash flow necessary to cover interest payments on mortgages.