Closed doors, abandon corridors, unused elevators, quite lobbies this is what COVID-19 has brought on the hotel industry. Covid-19 left traces even in the hospitality industry too! Public health emergency was declared in the U.S after January 21st due to the active case scenario popping out. From that very date, the hospitality industry has been fighting hard to gain back to its financial stand. Some forecasts even predict that hospitality industries will be affected until 2023 which leaves most of the hotel owners in terrible shock.
Why downfall in curve matters?
The fall in the industry happened because of the “TRAVEL BAN” across the nation. The travel ban was announced as a precautionary measure which turned the hotel industry upside down. The financial conditions of the hotel industry went to a greater crash which made many of the hotel owners struggle on paying their property taxes.
The hotel industry in the U.S.A felt a 28% drop in visit. Most of the visits were from china since the pandemic outbreak happened in china all visitations from china had been cut off in many hotels. The hotel owners would have approximately lost $4.6 million only from the Chinese visitors of the first half of the year. The major three cities which faced a downfall in COVID-19 are:
- San Fransico
- New York
- Los Angeles
These are the three cities that lost their major income due to the Covid-19 outbreak.
The economy class comes forward
Most of the luxury hotels in the United States were closed and occupancy rates show a 15% dip in luxury hotels. Six out of ten hotel rooms in the country were empty as recorded on 8th July 2020. Since luxury hotels were not available to stay most of the people moved to economy class hotels. A 40% improvised graph has been seen in many of the economy class hotels. The economy hotels are recovering faster due to high occupancy rates. But the overall forecast for hotel occupancy rate has reduced to 38% which is worse than the “GREAT DEPRESSION” in 1933.
Relief to hotel owners
As no sales or bookings are happening, it directly affects the revenue chain of hotel industries. But the U.S government has been very supportive in updating the tax policies and offering better tax reduction plans which can be huge financial relief. Two programs were released by the government. They are:
- Paycheck Protection Program
- Economic Injury Disaster Loan
Rather than this CARES Act came into an act that benefited many hotel and hospitality companies. They are:
- Alternative Minimum Tax
- Net Operating Losses
Because of the CARES Act, taxpayers’ funds are mostly protected which mutually makes the hotel owners relax for a while even amid this pandemic. CARES act is moreover an aid that helped the hotel owner’s community to kick back to normal.
Is the consultation necessary? Yes, of course! It is necessary to consult with your hotel property tax consultant and proceed with any plans that you are trying to cling onto. The U.S government has been so much helpful for small as well as big business markets during this time of COVID-19. The CARES act and other benefits will reflect based on your current financial and tax situation. Stay updated with tax reliefs and other government grants that can help you to outcome this financial crisis. The effect of hotel owners has also resulted in a job crash of many hotel employees. Looking up for better plans from the government will help hotel owners to sustain their employees for the betterment of their lives too. This pandemic shall also pass, and the hotel industry will raise back to its original financial standards again.