'Even 9/11 did not cause this': Tennessee hotels struggle with waning occupancy

David Floyd • Apr 2, 2020 at 8:31 AM

Music still played Wednesday morning from the external speakers at Wellington’s Restaurant in Johnson City, but its doors and those to the hotel it’s attached to are now officially closed to the public.

Messages posted outside the Carnegie Hotel’s front entrance notify visitors that, in order to protect the health of guests and staff, the hotel, restaurant and Austin Springs Spa will be temporarily closed starting Wednesday and through May 1.

Scott Hurley, the Carnegie Hotel’s corporate attorney, said owners were initially hopeful that community spread of the novel coronavirus (COVID-19) across the U.S. would be limited, but over the past 10 days, after consulting with government leaders and members of the medical community, they determined the risks were too great to keep operations going.

“We felt that it had reached the point that, even though we were using the most stringent methods we could conceive as far as cleaning and antiseptics and all those things, we just felt that there was a risk,” Hurley said. “And we did not want there to ever be a situation where someone could contract a problem at the hotel or dealing with folks there.”

The Tennessee hotel industry is one of a plethora of business sectors suffering as a result of the COVID-19 outbreak. Statewide, the American Hotel and Lodging Association anticipates Tennessee will lose 65,870 jobs that support the hotel industry, a figure that includes a loss of 17,744 direct, hotel-related jobs.

Hurley said he’s been involved in the hospitality industry for about 30 years, and Charlie Johnson, the owner and primary operator of the Carnegie Hotel, has been in the business since the late 1950s.

“Neither of us have ever seen anything remotely close to this,” Hurley said.

Rob Mortensen, president of the Tennessee Hospitality and Tourism Association, said Monday that most hotels have reduced their staff to a skeleton crew. He said some have seen a roughly 80% cut in their revenue.

Mortensen said domestic travel restrictions and advisories have cut down on tourism and business travel to Tennessee, and noted that he’s aware of a couple of hotels that delayed their grand openings in light of the epidemic. Because of the $2.2 trillion federal stimulus package approved last week, he said some hotels may be holding out to see how that money could assist them.

“You’d rather not lay off folks, but the other challenge is how do you stop the bleeding so that when you normalize, you can start back up?” Mortensen said.

Hurley said about 20 to 24 people will still be working at the Carnegie Hotel during its 30-day closure. A couple of weeks ago, Hurley said the Carnegie temporarily laid off some of its guest services staff, but he said the hotel plans to rehire those employees once the COVID-19 epidemic stabilizes.

“It is the firm plan of Carnegie Hotel to bring all of those people back,” he said.

Locally, numbers from STR, a company that tracks data for the global hotel industry, show that the occupancy rate for Washington County hotels dropped from 54.7% during the week of March 7 to 22.4% during the week of March 28. Compared to this time last year, Washington County’s occupancy rate plunged 62.8%.

Sullivan County saw a similar decline, with its rate dropping from 49.8% to 25.1% over the same time period.

These numbers appear to reflect national trends in the hotel market, which STR reported Wednesday is experiencing an overall occupancy rate of 22.6%, a 67.5% drop compared to last year.

“This is unprecedented,” said Brenda Whitson, executive director of the Johnson City Convention & Visitors Bureau about the numbers she’s been seeing from STR and HospitalityTN, a nonprofit trade association. “Even 9/11 did not cause this in the hospitality industry. We’ve never experienced anything like this in our industry.”

Whitson said large tourism destinations are likely bearing the brunt of the problem, but Washington County hasn’t been immune.

Many of the area’s hotels have furloughed employees, she said, particularly hourly employees and housekeeping. To her knowledge, Whitson said the Carnegie Hotel is the only hotel in the city that has temporarily closed.

Johnson City’s stay-at-home order, issued Monday, lists hotels and motels, to the extent they’re used for lodging and delivery or carry-out food services, as essential businesses.

Whitson said officials won’t know the impact of COVID-19 on March’s generated occupancy tax dollars until the end of April, but she expects there be will a significant loss in lodging tax revenue.

Ultimately, tourism officials don’t believe this slump will last and are optimistic that the industry will rebound.

“Once things start normalizing ... people will want to get out,” Mortensen said.

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