COVID-19 Economic Impact on Oregon Hospitality Industry · COVID-19 Economic Impact on Oregon...

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COVID-19 Economic Impact on Oregon Hospitality Industry ORLA Testimony to the Joint Special Committee on Coronavirus Response Week of March 16, 2020* *Updated March 19, 2020

Transcript of COVID-19 Economic Impact on Oregon Hospitality Industry · COVID-19 Economic Impact on Oregon...

Page 1: COVID-19 Economic Impact on Oregon Hospitality Industry · COVID-19 Economic Impact on Oregon Hospitality Industry ORLA Testimony to the Joint Special Committee on Coronavirus Response

COVID-19 Economic Impact on Oregon Hospitality Industry

ORLATestimonytotheJointSpecialCommitteeonCoronavirusResponseWeekofMarch16,2020*

*UpdatedMarch19,2020

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BackgroundOregonRestaurant&LodgingAssociation(ORLA):•Servesastheleadingindustryadvocate,strivingtoprotect,improveandpromoteOregonhospitality•Asanot-for-profittradeorganization,ORLArepresentsapproximately2,600members,andadvocatesforover10,220foodservicelocationsandmorethan2,000lodgingestablishmentsinOregon•Thelodgingandfoodandbeverageindustryisresponsiblefor183,191jobsbringinginover$13.8billioninannualsalesforOregon•SecondlargestprivateindustryinOregonbehindhealthcare

Restaurants•Everydollarspentinthetableservicesegmentcontributes$1.87tothestateeconomy•Everydollarspentinthelimited-servicesegmentcontributes$1.61tothestateeconomy•RestaurantandfoodservicejobsinOregonin2019=11%ofemploymentinthestate

Lodging•In2018,localtransientlodgingtaxesgeneratedmorethan$200milliondollarsacrossthestate•About82%oflocaltransientlodgingtaxspendingwasusedforgeneralservices•Tourism-relatedfacilitiesandpromotionshareoftotaljobssupportedbyhotelindustryinOregonis4.5%

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Current State of the IndustryInformationfromOpenTableonRestaurantsThisdatashowsyear-over-yearseateddinersatrestaurantsontheOpenTable networkacrossallchannels:onlinereservations,phonereservations,andwalk-ins.Foryear-on-yearcomparisonsbyday,wecomparetothesamedayoftheweekfromthesameweekinthepreviousyear.Forexample,we’dcompareTuesdayofweek112020toTuesdayofweek11in2019.

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Economic Impact on Restaurants

Todaythechoiceforarestaurantis1)Closeforgood2)Closetemporarily3)Layoffallnon-kitchenemployeestosupportdelivery/pick-up,whichwillnotsustainarestaurantforlonginwhichcase,itisbacktooption1or2.

Option2istheonlyviableoptionformany:Whenwecomeoutofthis,andthepublicgetsthe“allclear,”restaurants,bars,breweries,etc.mustbeabletoquicklyopenthedoors,gettheiremployeesbacktowork,andstartgeneratingrevenueforthestateandcities.

WehavenoideaatthistimewhowillsurviveGovernorBrown’sMarch16th ExecutiveOrderandwhowon’t.

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Economic Impact on Restaurants

McMenamin’shasannounceditislayingoff3000workers

BlackBearDinerinMadras,Oregonislayingoff38ofits51staff

ToroBravogroupinPortlandhaslaidoff90%oftheirworkersandclosed5oftheir7restaurants

TheOregonLotterysentoutnoticesthatvideolotterymachineswillbeturnedoffforthedurationofthebanfurtherreducingrevenuesourcesforbarsandrestaurants

LinktoOregonLiverestaurantclosuresandchanges:https://www.oregonlive.com/dining/2020/03/portland-restaurants-closed-due-to-coronavirus.html

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Economic Impact on Hotels1.Thedeclineinoccupancyisputtingrealestateassetownersatriskofbeingunabletomakedebtservicepayments.

A.Adeclineof15%inhotelrevenueputsmanyownersinapositionwheretheyarecash-flownegative, andthusunabletopaydebtservice,puttingthematriskofforeclosurebylenders.Majorhotelcompaniesarealreadyforecastingfarinexcessofthatdecline.

2.Thehotelindustryisfacinganabruptandunprecedenteddropinhoteldemandthatisgainingpaceandgettingprogressivelymoresevereeachdaythatgoesby.

A.Additionally,announcementsbycolleges,schoolsandprofessionalsportsleaguestocancelmajoreventsacrossthecountryandinOregonwillsoonhitleisuretravelbookings.Thiswillbroadenthegeographicimpactofsharpdemanddeclines,acceleratingthedamageacrosstheindustry.

B.Majorhotelcompaniesarereportingthattheyhavealreadycutforecastsforgroupsandmeetingrelatedbusinessinhalffortherestoftheyear.

i.Formanyhotels,groupsandmeetingrelatedbusinessesrepresentthevastmajorityoftheirbusinessinanygivenyear.

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Economic Impact on HotelsFromBend:Anecdotally,onehotellost$600,000inbusinessinoneweek.Mayhavetolayoffemployeesduetolossofbusiness.

FromahotelierontheOregoncoast:Intalkingwithlocalbankersthismorning,thereareapparentlyseveralsmallerowner/operatedhotelsinourareawhicharealreadyseekingfinancialhelpandpaymentrelief. Thiswillprobablycontinueandworsenoverthecomingweeks. SincemuchofthelodgingontheOregoncoastfallsintotheowner/operatedcategory,Iimagineanythingbeyondeightweekswillresultinpermanentlyclosingorforcingsalesofsomeoftheseproperties.

ForonehotelinthePortlandarea,herearetheeconomicimpacts:March:RoomRevenueDown$502,341F&BRevenueDown$85,131TotalRevenueDown$605,969Revenuedown66.4%fromlastyear

Theseareforecastedrevenues.Itisalsoimportanttonotethatlikely77%oftheirstaffwillbeplacedontemporaryleavebeforetheweekisover.

April:RoomRevenueDown$675,531F&BRevenueDown$128,261TotalRevenueDown$555,860Revenuedown75%fromlastyear

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Economic Impact on HotelsAnotherhotelgroupreported4hotelssawrevenuesdeclineby$1.7Minthelast10daysorso.Theclosuresofrestaurantswithinthepropertieshavetriggeredalargeuptickincancellations.Theyhavelaidoffabout150peopleandcounting,withtheneedtoconsidershuttingdownupto2ofthehotels,displacingfurtherjobs.

Oregon’slargesthotelhasclosedtheirdoorsandfurloughedtheiremployees.

ForPortland,estimatesarealossof$67millionforthebusinessthatTravelPortlandbooks.

Regardingcitywideandsinglehotels,theywillhaveanumberinadditiontothatabove.

Noteverythingiscancelled,butatleast60%haseithercancelledorhasgivenaheads-uptheyarediscussingit.

20conventionshavecancelledtheirtripstoPortland.

TravelPortlandestimatesa75%projectedrevenuelossfortheirorganization.

Domestictravel/trade:55%ofoperatorssaidthey’vereceivedcancellations.

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Impact on Hotel Room Demand And Total Job Loss:ComparisonBetween9/11,RecessionAndEarlyStageOfCoronavirusPandemic

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Relief Needs from the State of Oregon in Priority Order 1.UnemploymentInsurance

A.PrioritizethestabilityandaccessibilityoftheUnemploymentInsuranceFund:

i.Considertransferringthe2019corporatekickertotheUnemploymentInsurancefund.

ii.Createimmediateaccessforworkersdisplacedbybusinessclosuresandslow-downs.

iii.Eliminatejobsearchrequirementsforunemploymentinsurance,aswellasone-weekwaitingperiodsforbenefits.

iv.LiftrequirementthatemployeesbeemployedforsixmonthstotriggerWorksharebenefiteligibility.

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Relief Needs from the State of Oregon in Priority Order2.Tax RelatedRelief

A. Recognizingthecash-flowcrisisfacingbusinessesacrossthestate,delayimplementationofthenewCorporateActivitiesTaxuntilJanuary1,2021,sothosefundscanbedivertedtomeetingpayrollandprotectingjobs.

B. Asklocalgovernmentseithertoputaholdonnewtaxmeasures,pendingresolutionofthecoronaviruscrisisortoworkwiththeirlocalbusinesscommunitiestoconsiderdelayingorchangingimplementationstrategies

C. SuspendpayrolltaxesforsmallbusinessesforthedurationofthebanD. Createataxcreditforrestaurantsandlodgingoperationsalongwithotherfacilitiesthatissuerefundsforcancelled

eventsE. Createincentives,includingtaxcredits,forinvestmentsinjobretention,extendedpaidtimeoffandremotework

opportunitiesF. Extendtaxfilingdeadlines

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Relief Needs from the State of Oregon in Priority Order3.FacilitatingJobProtectionandBusinessContinuity

A.Relaxpredictiveschedulingrequirementsandenactmoratoriumonpenalties

B.Protectemployersfromincreasedratesandpenaltieswhenemployeesmakeclaimsforunemploymentduetoreducedhoursorbusinessclosures

C.ConsiderprovidingcommercialrentreliefandplaceamoratoriumoncommercialevictionsafterMarch15,2020forthedurationoftheadministrativeaction

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Relief Needs from the State of Oregon in Priority Order3.FacilitatingJobProtectionandBusinessContinuity

D.Provideemployerswitha60-dayextensionoftimetofiletheirstatepayrollreportsand/ordepositstatepayrolltaxeswithoutpenaltyorinterest

E.DeferallcityandstateBusinessLicensingFeesforthreemonths

F.DeferallcityandstateBusinessTaxes.DeferpaymentofquarterlybusinesstaxesdueApril30,2020,ninemonthstoFebruary2021withnointerestorpenalties

G.90-daydeferralofpaymentofrealpropertytaxesforhotelswhiletheyrecover

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Relief Needs from the State of Oregon in Priority Order3.FacilitatingJobProtectionandBusinessContinuity

H.Allowrestaurantkitchenstoremainopentohelpalleviatestrainandincreaseddemandongrocerystoresbyofferingtakeoutand/ordeliveryservice

I.Helpfromstateandfederallegislatorstomakesurebusinessesarecoveredbyinsurancefornon-continuityofoperations

i.Mostproperty&casualty(P&C)insurancepoliciesonlycoverlossofpropertyorlossofsalesbutlossofsalesisnotcoveredbycivilauthorityclosingestablishments

J.Consideragrantprogramforhospitalitybusinesseswhohaveseensalesdecreasesof25%ormore

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Relief Needs from the State of Oregon in Priority Order3.FacilitatingJobProtectionandBusinessContinuity

K.Allowforalcohol(mixeddrinks,beer,wine,bottlesofdistilledspirits)tobesold,to-go/delivery,pick-up/curbside

L.Createastatewidepre-emptiontoallowcurbsidepick-upforallrestauranttakeoutandtogoorders

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Communication

1.EstablishregularlinesofcommunicationbetweenbusinessandOregonleaderstohaveregularupdatesandstrategydiscussionsandcreatesector-by-sectorresponseteams.

2.Createasmallbusinesscrisislinetotriagecallsfromemployerstoaccesshelpfromstateagencies.

3.RequirestateagenciesincludingtheOregonHealthAuthority,BOLI,Employment,Transportation,Lottery,Revenue,andSecretaryofStatetocreatedesignatedresourcesitesforemployers.

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QuestionsJasonBrandtPresidentandCEOOregonRestaurant&[email protected]

GregAstleyDirectorofGovernmentAffairsOregonRestaurant&[email protected]