Hotel Laundry Operators: Look for Sunnier Skies in ’21

Posted June 4, 2020 at 6:25 pm



U.S. hotel laundry operators were rocked earlier this year by COVID-19 pandemic-related lockdown orders that squelched travel, especially business and leisure travel in March and April. But the good news is – notwithstanding the X-factor of today’s urban unrest – that hotels, particularly higher-end hotels, could recover in 2021 as robust demand drives spending.

“Once there’s a recovery there’s going to be a lot of pent-up demand,” said Ryan Lynch, business development executive for STR Global Ltd., a hotel analytics firm that monitors 68,000 hotels worldwide and 35,000 in the U.S. “The term that they’re using in China right now is ‘revenge spending’ or ‘revenge travel.’ What they were hoping was after being cooped up for so long, people were going to be spiteful in their desire to travel.”

Lynch gave roughly 60 online attendees an overview of trends in the hospitality market during a June 2 TRSA webinar sponsored by Kannegiesser ETECH. The one-hour session addressed the shock-trauma that hotel operators experienced earlier this year when the COVID-19 pandemic slammed the brakes on travel in the U.S. and worldwide. The numbers included in Lynch’s PowerPoint presentation painted a grim picture that’s all-too familiar to U.S. hotel laundry operators. Specifically, three of the key performance indicators (KPIs), that STR tracks fell precipitously in late March/early April as the shutdowns took hold. “April 2020 was the worst single month ever,” he said. “Period.” Occupancy fell 68.3%; ADR (average daily room rate) dropped 44.4% and RevPAR (revenue divided by total available rooms) plunged by 79.9%. No wonder hotel laundries had to scramble to find alternative business opportunities and/or shut their plants temporarily.

Even worse, the downturn hit high-end luxury properties worse than those in the economy sector. Many of those still traveling during the pandemic were delivery drivers or long-term stay people who tend to opt for budget accommodations, Lynch said. For laundries, the steadier numbers at economy hotels had limited impact because these businesses tend to rely on on-premise laundries more than outsourced services. Lynch compared this latest downturn to similar periods of decline after 9/11 and the ’08-’09 recession. The impact of COVID-19 was more significant as well as abrupt. The previous downturns saw declines take place over a couple of months, rather than in a few days as with the pandemic.

Moving into the summer with lockdown rules coming off, Lynch predicts a gradual improvement, though probably not enough to match last year’s record hotel performance. The U.S. is about two months behind China in its recovery, but – for whatever reason – the U.S. is well ahead of Europe, which has yet to see much of a recovery.

Even at the low point in April, U.S. hoteliers were still renting about 1 million rooms a night and about 100,000 people were taking flights, according to Transportation Security Administration (TSA) data, Lynch said. Those figures have gradually increased through May 23 with China reaching 45% hotel occupancy and the U.S. at 35%, he said. Europe had dropped to 10% occupancy in March/April and as of late May they were still at 12% occupancy.

The bottom line for laundry operators is that if you can survive 2020 with Paycheck Protection Program (PPP) loans, diversification into healthcare or other sectors, the chances are that your higher-end hotel business will recover next year, even if it doesn’t match the nine-year record growth trend that peaked in 2019.

Lynch predicts overall occupancy in 2021 to rise by 45.5%; and RevPar by 48%. The outlook for luxury hotels is even rosier with 128.8% occupancy increase predicted and a 104.9% increase in RevPAR. If business travel, including group meetings, recovers that could also boost demand at upscale hotels that tend to host most large events. Only time will tell if the furor over the May 25 death in police custody of an African-American man, George Floyd, will subside in the coming days or weeks.

Since the COVID-19 crisis broke in early March, TRSA has aired nearly 30 webinars on the pandemic and related issues. You can access Ryan Lynch’s presentation and other TRSA webinars through TRSA’s on-demand learning library, which allows you to “live stream” all of the association’s webinars. TRSA members can purchase webinars, and other training and educational resources at a reduced member price. Visit www.trsa.org/ondemand to go to TRSA’s On-Demand Learning portal to view this webinar and more.

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