Hotels Confronted by COVID-19 Crisis – Overwhelmingly Small Businesses

By at 7 May, 2020, 8:10 am

by Raymond J. Keating-

Most industries have suffered by the coronavirus pandemic and related shutdown, but all things related to travel have been hit particularly hard. That most certainly includes hotels and motels.

A recent report from CNBC noted the average daily rate and revenue per available room took big dives in March, on a year-to-year basis, for U.S. hotels, as well as in other regions around the world. For good measure, it was noted:

“It came as several major hotel chains announced layoffs and reduction in wages. Marriott and Hilton, some of world’s largest hotel chains, have furloughed thousands of employees. Other companies in the industry, such as online traveling platform Expedia Group, announced in late February that it was cutting 3,000 jobs. Meanwhile, travel site Booking Holdings — which has 27,000 employees — said it was on a hiring freeze.”

But there’s much more to the story, of course, and when it comes to hotels and motels, it’s a small business story. According to the latest U.S. Census Bureau data (2017), the industry is very much a small business one.

Size of Firms by Number of Employees     Percent of Total Employer Firms in the Hotels (except Casino Hotels) and Motels Sector
Less than 10      50.5%
Less than 20      72.9%
Less than 100      95.8%
Less than 500      98.9%


So, while the shakeout from this crisis-related recession promises to be brutal for all, small businesses have been suffering and will suffer most, and that includes small firms in the hotel and motel business. Indeed, it’s important to keep in mind that beyond the large business headlines in industry after industry, America is a small business economy.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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