July 6, 2022

‘It’s been a challenging year’ | Local hotels respond to COVID-19 | Business World

It doesn’t take an industry expert to deduce that the area’s hospitality industry has been…

‘It’s been a challenging year’ | Local hotels respond to COVID-19 | Business World

It doesn’t take an industry expert to deduce that the area’s hospitality industry has been decimated by the COVID-19 pandemic.

With intra- or interstate travel ill-advised, indoor service at restaurants, bars and wineries barred for much of the past 10 months, and conventions, sporting events, weddings or any social-gathering largely postponed or canceled, hospitality is inevitably impacted.

The question is, by how much?

For restaurants and hotels around the state, the economic harm has been staggering.

According to the Washington Hospitality Association (WHA), more than 106,000 jobs in the industry have been lost and the organization predicts a 45{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} permanent restaurant closure rate across the state. A survey conducted by the American Hotel and Lodging Association (AHLA) found that 49{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} of lodging properties will go into foreclosure without additional federal aid. And 41{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} of lodging employees statewide are out of work.

“Without question, there is no other industry that has been as economically harmed by this pandemic than the hospitality industry,” WHA Directors Julia Gorton and John Lane wrote in a letter to the Association of Washington Cities on Dec. 14 in an effort to ease building and permitting restrictions. “No other industry has come close to feeling the same economic impacts as your lodging establishments.”

The WHA alleges that there has been a steep decline in local lodging tax revenue compared to 2019, which has been mostly reflective in the valley, where it’s down 45{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in Wenatchee (through August) and about 20{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in Leavenworth (through September).

Leavenworth’s tax receipts show business improved in late summer, with 2{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} growth in August and 7{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in September, but not enough to overcome the dramatic drops early on — a 76{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} drop in March, 97{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in April and 53{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in May. Figures from the last quarter of the year — December traditionally produces the most hotel/motel revenues for the city — are not yet available.

Chelan, however, is the outlier. 

According to city lodging tax receipts, Chelan is above 2019 dollars by 1{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} — $15,603 — through the first nine months of the year (the latest figures available).

That’s mainly because of the tourism swell the city received from June through September — to which anyone who visited the lake town over the summer can attest. The city was packed to the gills with Seattleites, out-of-towners and local Wenatchee folks looking to escape the mundane for the campgrounds, vineyards and Lake Chelan.

Compared to 2019, Chelan showed positive growth in lodging tax revenue over the summer months, which also includes short-term rentals. Tax revenues were up 1{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in June, 14{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in July, 19{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in August and 24{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in September.

“If you had been here this summer you would not be surprised,” City Finance Director Steve Thornton said in an email. “Chelan had a very busy summer. I assume that our season is reflective of the same busy season in our national forests, campgrounds, and anywhere else people could get out to recreate this year.”

That said, similar to Leavenworth, Chelan’s hotel/motel tax revenue drops were stark early on, down 56{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in March, 89{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in April and 46{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} in May. Unlike Leavenworth, Chelan doesn’t have the winter draw, even in a good year.

While Campbell’s Resort and Midtowner Motel President Tom Campbell conceded that they had a good summer, overall the COVID-19 pandemic has been devastating to his business.

“The net effect on our business has been nothing short of a disaster for us and our industry,” Campbell said in mid-December. “I can’t speak for the lodging community at large, but we’ve been completely ravaged by this.”

Aside from the summer tourism, Campbell said a lot of their room bookings are derived from conferences, events and other government meetings.

“We’re a conference center, so we’re not over last year’s numbers or over the last four months,” Campbell said. “How is our winter fairing? It’s an impossible question to answer. It’s bringing far less than what we would anticipate on a normal year based on our conference business. Nothing about this year has been predictable. We saw an influx of folks that needed to get outside over the summer, forest fires eliminated our September and then back into the deep freeze in October. It’s been a challenging year.”

Campbell said that while the average daily rate has been steady, the primary impact has been the percentage of occupied rooms.

“Normally it’s pretty slow in November and December but we’re experiencing at least half of that reduction in guest rooms,” he said.

While it’s tough to make any kind of predictions at this point, regardless of where the state is with the pandemic, Campbell is relying on another strong summer for tourism in 2021. The lake, after all, isn’t going anywhere.

“If this last year has taught us anything, it’s that summer will happen,” Campbell said. “People have to get out, it’s our responsibility to provide a safe and responsible place for folks to spend their time. Chelan will continue to be a vacation destination, and we’ll be there for it.”

Leavenworth, which is also known as a resort location, is in the same boat. Though they didn’t receive the same summer bump as Chelan, in August and September lodging taxes were up 4{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} compared to 2019. Even without a Christmas Lighting Festival people are still coming to Leavenworth.

The World reached out to six hotels in Leavenworth, none of them responded to an interview request.

On the opposite end of the spectrum, Wenatchee has been down in lodging tax dollars all year. Even in the two months prior to COVID-19 Wenatchee was below 2019 revenues by about 17{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5}. 

“The average daily rate of a room has dropped by almost $30 and we’re only at 54{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} of rooms rented,” said Jerri Barkley, marketing director at Wenatchee Valley Chamber of Commerce. “As soon as March hit, we’ve been declining. June was terrible (52.8{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} occupancy) and August dropped considerably from 2019.”

Worse, 33{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} of the unemployed workers in Wenatchee and East Wenatchee are in the hospitality industry, Barkley said.

“We’ve lost over 1,500 employees and that was before the last round of closures went into effect, and additional layoffs have happened since then,” she said.

While Barkley said she hasn’t tried to predict whether certain hotels would close, what makes her nervous heading into 2021 is the fact that three more properties are already under construction and planned to open.

  • The Sleep Inn, 265 E. Penny Road, next to Wenatchee Comfort Suites, 85 rooms.
  • Wenatchee Avid Hotel, 1640 N. Wenatchee Ave., 95 rooms.
  • Residence Inn by Marriott, next to Walla Walla Point Park, 127 rooms.

“We’ll be adding 307 additional hotel rooms to the inventory,” Barkley said. “So you look at the region losing $2 million in convention business and construction on those hotels won’t stop. That will take us over 2,000 hotel rooms in our area. The only saving grace for us is the fact that we have local attractions like Rocky Reach, Ohme Gardens, Mission Ridge and all the trail expansion that continued to happen in the foothills. Those are the four things to talk about to re-invite people back here.”

But conventions, which are Wenatchee area hotels’ bread-and-butter, are still a question mark heading into 2021.

“I don’t know how 500 people are going to feel gathering in the same room,” Barkley said.

It’s the same with sporting events, like baseball/softball tournaments, the AppleSox, Wild and trail runs, which were all canceled over the summer. 

Freyda Stephens, general manager at the Coast Wenatchee Center Hotel, said they’re not anticipating bigger meetings until late 2021 or 2022.

She said the Coast Hotel had some nice bumps in July and August with a lot of last-minute bookings, but it slowed down in September.

“Basically at that point, individual travel on the weekends slowed down,” Stephens said. “The nice thing about our hotels in Wenatchee though is they are owner-operated, so there is a lot of longevity with owners and management. I don’t think we’ll hit that 4-of-10 (hotel foreclosure) number. Wenatchee has always been a very good price value for guests willing to get out. We know it will be slower in the first quarter based on the meetings that won’t be held, but hopefully, we can get things under control with the pandemic and build back up by summertime. People will want to get out, and we’re here for them. You have to have faith.”

Aside from the dollars lost from a lack of bookings, Stephens said it’s been expensive to get the hotel COVID-19 ready. From acquiring cleaning supplies to PPE for staff, it’s been a hassle. And for 147 rooms, the Coast has spent between $12-15,000 on supplies, which is an ongoing expense.

“When it started in March we were just trying to get product and disinfectant, and everyone was loading up on it,” Stephens said. “Personally I think the safest place to be in Wenatchee is in a hotel because we have everything so disinfected. I even have a house person that follows people around and wipes right behind them. It’s definitely an additional expense, but knock on wood we’ve had positive results and it’s our responsibility to keep guests safe.”

Stephens said the hardest thing over the past 10 months has been reducing the hours of employees and closing her restaurant — prime rib, chicken marsala and salmon don’t necessarily lend themselves to takeout.

“It’s the staff, and I think you’ll find that for most in the hospitality industry, we work with good people and it’s a community,” Stephens said. “There is some seasonality during the slow season, but everyone rises to the occasion during the busy time of the year. And not being able to have those people still with us has been painful.”

Steve Tramp, owner of the Wenatchee Comfort Suites and Quality Inn in Spokane said he’s been running about 50{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} of the business they did last year.

“In Spokane, we’re doing about 40{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5} of the business we did last year, so what that tells me is Spokane is not as hearty of a market as Wenatchee,” Tramp said. “We have the new Sleep Inn that’s scheduled to open on January 1. Originally we planned to open at the end of November for Christmas Lighting, but once it was canceled we decided to push the date.”

Why open a hotel now though?

“You might say it’s crazy now, but we have the building, we have the permit, and there is no better time to learn than during the slow season,” Tramp said. “With the promise of a vaccine, we’re expecting things will open up a little bit as more of it gets released, and hopefully we’ll see more people comfortable with traveling. It’s hard to travel to Wenatchee though if the restaurants, bars, or other attractions aren’t open.”

Tramp expressed optimism though when looking ahead, agreeing with Stephens’ timeline of a slow first quarter but a better second and third in 2021.

And ultimately, he’s a glass-half-full kind of guy.

“Hospitality is something both my wife and I love and have been doing for 30-plus years,” Tramp said. “Even in the last nine months, I don’t think there has been one time where I’ve said I hate my job. It’s fun to see new challenges and figure out how to address them, and I’ve heard the sad stories; business is down, there are a few fewer employees, we all get that.”

“There is some good stuff too. I got up this morning, drove into work and watched a beautiful sunrise which I wouldn’t have seen had I not been coming in at 6 a.m. When I drive home I get to see the lights up on Mission Ridge in the hills. We have a tendency to look at the things that don’t appeal to us and miss the positive things.”