August 17, 2022

Illinois hotel owners optimistic about hospitality industry recovering, but business travel still lags

SPRINGFIELD (WGEM) – Hotel owners across the country hope to see the hospitality industry fully…

Illinois hotel owners optimistic about hospitality industry recovering, but business travel still lags

SPRINGFIELD (WGEM) – Hotel owners across the country hope to see the hospitality industry fully recover from COVID-19 economic losses by 2024. Illinois hotels have seen a significant increase in leisure travel during the summer months, but many owners are still waiting for a boost from business travel.

Illinois Hotel & Lodging Association President and CEO Michael Jacobson said the state continues to see metrics grow each month. Jacobson said Illinois saw hotel occupancy hit 72% during June, beating the 70% occupancy rate across the country. He noted things are looking far better for Illinois hotels than in the past two years, but occupancy levels haven’t returned to the rate seen in 2019.

JUNE 2022 HOTEL OCCUPANCY RATES (STR DATA)
70% United States
72% Illinois
71% Bloomington
65% Springfield
65% Rockford
64% Quincy
60% Champaign
58% Peoria

Family leisure travel is expected to wane going into the fall and winter months, but Jacobson is excited to see more business travel for meetings and conventions soon. The Pritzker administration also put $30.3 million into the ‘Middle of Everything’ tourism campaign this year.

“Our industry is really dependent on leisure travel right now. It’s kind of the pent-up demand of families deciding where to take vacations to,” Jacobson said Tuesday. “I think our state being able to play on a level playing ground with all the other states in the country, marketing in the same fashion, plays a huge role.”

Still, Jacobson said one strong summer for hotel owners won’t make up for the economic damage from the pandemic. He says there’s still a long way to go until hotels find profitability and are able to pay off old bills. State lawmakers passed a $75 million relief plan for hotels this year, but that money hasn’t been disbursed yet. Jacobson noted hotel owners are extremely thankful for the four rounds of relief funding passed by the General Assembly.

“It’s helpful when we’re talking to our banks and trying to avoid things like a foreclosure,” Jacobson said. “It’s been a huge help, especially considering that the federal government did not provide a dedicated source of relief to hotel owners the same way they did for other industries within hospitality like the airlines and restaurants.”

Jacobson stressed the financial relief from Illinois leaders became a lifeline for many hotel owners who struggled to get by during the peak of the pandemic. Although, he explained hotels could face challenging headwinds over the next few years with the possibility of a nationwide recession, high gas prices, and spikes in COVID-19 cases.

Shockingly, Jacobson said inflation hasn’t challenged the industry’s recovery. Customers may notice that room rates are higher than they were several years ago, even though the occupancy rates haven’t recovered fully. Jacobson explained wages have gone up considerably over the last three years, energy costs continue to soar, and hotel owners have to pay property taxes as well.

“Really, the cost of every single thing that a guest consumes while they are at a hotel has gone up considerably over recent months. So, naturally, the price of the room has gone up,” Jacobson added. “What we haven’t seen is that play a major role in the consumer attitude.”

While this has been a strong summer for travel, Jacobson said it was devastating to lose $5.4 billion in economic activity for the state’s hotels since the start of the pandemic. He said the decline in hotel use also cost more than $1 billion in state and local taxes.

Labor shortages are the top issue for the hotel industry across the board. Jacobson said a lot of people don’t understand how many different jobs there are in hotels and lodging. There are many more jobs than the front desk or housekeeping, Jacobson added.

“Regardless of your interest level, whether it is in accounting, sales, customer service, or maintenance and engineering, we have a job for you 24 hours a day,” Jacobson said. “Hotels never shut their doors, so there are jobs for single parents who need some flexible working hours or students who need a job on the side.”

Jacobson would like to see Illinois lawmakers create more incentives for people looking for work to start jobs in the hotel industry. He stressed that many of the jobs in small or large hotels can help create a path to the middle class for people.

“Sometimes we just need some help with job training or working with local economic development agencies to connect those dots and make sure people realize the opportunities that exist,” Jacobson said. “There is support out there and I’m hopeful that we’ll be able to link up and help those people looking for work while also helping hotel owners find workers to join their team.”

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