The Indicator from Planet Money - Opening A Hotel During A Pandemic

The U.S. is down around 3.5 million hospitality jobs since the pandemic took hold. But in spite of setbacks, hotels continue to open.

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I don't know. You went somewhere special. I did I went to Woodbridge, Virginia. I'm just south of Washington DC to a shopping cluster buy an interstate highway and I met this man and what happened today. We opened our hotel today. This is a Marriott TownePlace Suites. It's an Extended Stay product. Every room has a kitchenette sweet microwave what size refrigerator top dishwasher brand new hotel in the year 2020 only Not What It Seems like the last thing you'd want to do is to launch a new business. That's all about travel. It has been a difficult year for nap, and I have to say getting up fly by masks.

Play Disturbed tour of this empty shiny Hotel was really surreal like The Shining Star real or are you going swimming and I have not been swimming in my daughter has first dibs on this hotel in 6 months including weekends. You feel less or more crazy. Now that you've opened a hotel and a pandemic. This is indicator from Planet Money on card of Perseus joined by Alina selyukh of NPR business. That's because Alina has brought a story that we're going to feature on the show today what it takes to open a new hotel in a pandemic a decision. That's not a matter of wanting to do it, but pretty much having to do it.

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Okay, Alina, tell us a little bit more about nav. He he's not new to the hotel business, right? Not at all. I have and his brother-in-law Mike co-owned 5 hotels through there for a marquis hospitality and David in this business their whole lives like nav literally grew up in a hotel in Virginia. His parents bought it when they first immigrated to the US from India and the family actually lived in it. When I was 9 years old 10 years old. I was making rooms and cleaning the pool length of the grass and doing the laundry and answer the phone. I think it's pretty clearly been established at nav was not like some new Daft rookie when he decided that the year 2020 it would be a great time to open a hotel Elena thing that decision he made it years ago. There are so many steps that have to be done in advance Navin Mike scouted potential locations. They got different permits. They had to apply.

How to be a franchisee in this case through Marriott, they had to secure a huge bank loan usually depending on the size of a hotel we're talkin 426 billion dollars when you're staying at a hotel. You're probably not thinking about the fact that someone somewhere it pays a mortgage on that building kind of like they would for house and after all that the construction can start and that happened two years ago. Wow, that is a long delay and kind of unfortunate timing that the construction would finally be done and ready for the hotel to open this year. So how far along was the hotel when the pandemic started it was almost there. They were kind of in the last steps of the opening of a hotel they had hired a general manager who was starting to look at potential staff. He was down to like interior touches, you know, drywall countertops headboards, all of that was about to arrive from overseas or from other states, but then Fort started to shut down warehouses Interstate Trucking. Almost.

The delays just started to snowball shut down or carpet was delayed because we had Furniture shipments that were actually delayed on the west coast of California because of the container ships that will quarantine. It was no court that they could go to to offload the containers for them to ship them out. Everything was cascading basically only spoke to Naf which was in September. It was like this weird Time Capsule Inside the Hotel like Frozen in that pre-opening phase we were on video and he showed me around and you know the carpets were they are the TV was hooked up the water was running but like the mattresses were in plastic Linens were missing. They were still waiting for final inspections. That's basically everything was paid for lots of money spent but not necessarily maybe not any money coming in right exactly a hotel is a huge investment whether it has people or sits empty now and Mike still have to pay

Texas water gas and electric bills and remember there's a giant loan the mortgage tens of thousands of dollars and that's why they kept pushing and pushing and hoping to open because trying to make some money from a few guests is better than nothing. Nothing is not at all an exaggeration. I mean an empty hotel is a financial drain and it's typing any year, but I can only imagine that this year with hospitality and Leisure, you know down almost three and a half million jobs. It's it's especially tough generally are a good mix of locations near airports are highways in the spring when travel usually gets going. Nobody went anywhere grounded convention hotels might have had just canceled. That's when we hit a rock bottom on occupancy come March 15th fell off the cliff and literally when I say this went down 10%. 10% occupancy.

The last two weeks and we probably hit a high of 40% occupancy of thinking July for an average hotel you have to do around 60% occupancy to pay your bills to an extent and that's not counting your debt service asking for deferments on loan payments. Now, I've got most payments deferred for 3 months. Then another three months payroll is a big expense, of course, so he did have to lay off in 4 Low staff obviously stop taking a salary. He and Mike started dipping Into Cash reserves and some personal savings, then they looked for cuts to expenses cutting back on supplies. They keep in stock. For example, Dan also that's why the financial relief package that was passed back in March was such a big deal and especially the part of that. That was the paycheck Protection Program, which gave Aid to small businesses.

A lot of hotels save it. That's how they managed to survive. But of course that was then and now it seems like there's no new assistant coming Mikey Hospitality did get some money from the patient Protection Program and Mark and a say it was critical to keep some staff. The other huge thing was that they were able to defer the payments on loans, but now even though the pandemic seems to be actually getting worst. Some banks have started charging again and in some cases they're asking for both interest and principal where you at, how are things looking give us your forecast, you know for the next six months and then fortunately, unfortunately, it's a dire picture there is no business on the books like we would normally have he says no,

Only about a third of bookings are made far enough in advance for him to start planning. But now that guaranteed business is out the window in this case the brand new $10,000 floor-to-ceiling window Selena. What what's their plan a lot of painful number-crunching? They're definitely really looking forward to vaccine now's forecast is another six to eight months of Sirius belt tightening. Their main focus is to get through the winter, which is when many hotels go dormant in the best of times. So I guess November isn't even stranger moment to be opening a brand new property. But like the proverbial show a hotel opening must go on very nicely said thank you so much Lena from NPR's businessdesk. Thanks. I enjoyed my stay in this episode of the indicator was produced by Brittany Cronin. In fact check by Shawn. Saldania indicators editor is Patty Hearst and indicator is a production of NPR.

how did the morning go morning went very well we had our first check in guests are open sign and they decided to come on in and run a room

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no no no do not know them at all
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