Pummeled by the Pandemic, Lodge Homeowners Get Artistic With Their House

Pummeled by the Pandemic, Hotel Owners Get Creative With Their Space

Like many hotels hit by the pandemic, the InterContinental Times Square is trying to hold on.

After the tourists stopped arriving this spring, the 607-room property was transformed into accommodation for doctors and nurses treating coronavirus patients. When they checked out, the skyscraper offered blocks of rooms for office space. And when it reopens this month, the InterContinental will once again play office rental, this time suite by suite.

"We try to be creative," said Gul Turkmenoglu, the general manager, "and we hope that our ideas will prevail."

Across the country, hotels have tried to reinvent themselves as the hospitality industry struggles with a sharp downturn – as schools, emergency shelters, wedding halls, or the homeless shelters – although new uses may be neglected.

There are signs of financial hardship. In New York, according to the analysis firm Trepp, 44 hotel loans with bonds totaling USD 1.2 billion are in arrears in September. In second place was Houston with 39 criminal loans of $ 682 million, followed by Chicago with 29 of $ 990 million.

While foreclosure wouldn't necessarily result in a hotel closing, many analysts don't expect the industry to fully recover by 2023.

"In general, every hotel in America has lost 20 to 35 percent of its value in the past six months," said Keith Thompson, principal of the hospitality group at brokerage firm Avison Young, which is beginning to list distressed hotels at steep discounts.

Government efforts to accommodate people in need have eased somewhat. For example, New York rented 11,000 rooms in hotels from April to July for medical workers who didn't want to infect their families, as well as for Covid-19 patients who couldn't isolate properly at home. One of them was a Hilton Garden Inn on West 37th Street, where three patients died in April after being discharged from hospitals.

This spring, New York rented at least 63 of the city's 700 hotels to homeless people vulnerable to the coronavirus in open shelters. The city is paying $ 120 per room per night to the hotels that were home to 9,500 people during the pandemic, most of whom are still there, a ministry spokeswoman for homelessness services said.

Includes chain outposts like DoubleTree and SpringHill Suites, as well as Kixby, a 195-room boutique hotel on West 35th Street with a mixology bar in the lobby.

However, the implementation of the plan has not always gone smoothly. Some of the 300 men housed in Lucerne, a hotel on the Upper West Side, used drugs and were noisy, according to local residents. The city later moved the group.

Miami took a similar approach to coronavirus containment. Five hotels were designated as accommodation for doctors, the homeless and Covid-19 patients for a total of more than 2,100 people from July to September.

State and regional funding will cover the rooms and meals, said Frank Rollason, director of emergency management for Miami-Dade County. “We had to evacuate some people. A meth lab was set up in one room, ”said Rollason. "But we also saved lives by preventing a pyramid from infecting people."

Regardless of whether new residents act as troublemakers or not, the hotels seem to be on a lifeline. About 100 have emailed Mr. Rollason about participating in the program, he said. Their interest seems understandable, as the number of tourists has fallen sharply.

But state money can be a trifle compared to what came before. The Doral Inn and Suites, a 112-room hotel for business and leisure travelers near the Miami Airport, is raising $ 35 a night for units that were once priced at $ 250. A week ago, 73 rooms were assigned.

Alex Nahabetian, the manager of the family-run hotel, said he had planned to renovate the property, which was built in the 1980s. But then the pandemic struck and his lender withdrew funding because hotels were at risk. That lender would also give Mr. Nahabetian a three-month grace period on his mortgage payments, a grace period that expired in June.

"The program was a great lifesaver," he said. "Otherwise we would be permanently closed."

Hotels that have not been selected for government relief often convert spaces into offices at a time when office buildings remain closed.

At London West Hollywood in Beverly Hills, a 226-unit property in West Hollywood, California, beds have been removed to create workspaces more like boardrooms. About five have been rented for $ 5,000 every month since June, a spokeswoman said.

However, most properties seem to bet that all staff will need is a desk. As most rooms already have one, the hotel does not need to do any renovations.

Employees at Hotel Figueroa, a renovated Spanish colonial landmark in downtown Los Angeles, usually only reposition furniture at the customer's request. The 268-room hotel that housed medical workers from the pandemic has rented 200 offices for $ 25,000 since June, a spokeswoman said.

However, office space is usually much cheaper than standard rooms. In InterContinental Times Square, the daily rented offices are about 30 percent cheaper than the overnight stays, and the prices for these sleeping quarters have fallen by more than half since last year, Ms. Turkmenoglu said.

Hotels are also rethinking their public areas. Last month, five families rented a conference room at a Courtyard by Marriott in the suburbs of Elmhurst, Illinois so that their first grade students could conveniently take distance learning. The fitness class took place in the hotel pool.

Usage of the room is typically $ 600 per week. The families paid $ 350. That's not insignificant when the occupancy is a third of the normal occupancy, said Tania Gawel, sales manager at the 140-room hotel.

"It was very slow," said Ms. Gawel, "so the point is to think outside the box."

Other hotels, such as the Great Wolf Lodge Resort in the Pocono Mountains of Pennsylvania, have set up distance learning facilities to attract vacationers. And ballrooms that used to host business conventions are now being marketed for "micro-weddings" to replace larger parties that have been canceled.

The background to the survival effort is grim. Nationwide about three dozen hotels had permanently closed by last month, including in Austin, Texas; Denver; and Washington, according to STR, a hotel analytics company, although that number is expected to skyrocket.

"Some properties can cost $ 1 million to turn on a light monthly on some properties," said Jeffrey Davis, agent at commercial real estate firm JLL and co-head of the Hospitality Group. He added that debt servicing could add $ 5 million.

By the end of September, 188 of 700 New York hotels had closed, and their status is unknown, according to the Hotel Association of New York City. Closures included Omni Berkshire Place, Hilton Times Square, and two Courtyard by Marriott hotels. Some could purposely stay dark to save labor costs until the market improves, brokers said. But taxes meanwhile devour reserves.

Most of San Francisco's 215 hotels are temporarily closed, with some not planning to reopen until next year, said Kevin Carroll, executive director of the San Francisco Hotel Council, a trade group. As in other cities, the hotels there have filled empty spaces with key workers, quarantine people and people looking for alternatives to home offices. Evacuates from the region's devastating fires have also settled, Carroll said.

However, giving hotels to other uses, particularly as homeless shelters, can cause short-term damage to properties, Davis said. "You might get a bang for your buck on your rooms, but wear and tear in your hotel is something to be reckoned with."

Part of the rebranding could become permanent. Mr. Davis has seen buyers interested in converting difficult hotels into dormitories or "micro-apartments".

"This is something completely new that we haven't seen in previous downturns," said Davis. "And it's probably one of the most interesting."


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