COVID-19 Economic Impact on Oregon Hospitality Industry
ORLATestimonytotheJointSpecialCommitteeonCoronavirusResponseWeekofMarch16,2020*
*UpdatedMarch19,2020
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%
Current State of the IndustryInformationfromOpenTableonRestaurantsThisdatashowsyear-over-yearseateddinersatrestaurantsontheOpenTable networkacrossallchannels:onlinereservations,phonereservations,andwalk-ins.Foryear-on-yearcomparisonsbyday,wecomparetothesamedayoftheweekfromthesameweekinthepreviousyear.Forexample,we’dcompareTuesdayofweek112020toTuesdayofweek11in2019.
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.
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
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.
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
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.
Impact on Hotel Room Demand And Total Job Loss:ComparisonBetween9/11,RecessionAndEarlyStageOfCoronavirusPandemic
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.
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
Relief Needs from the State of Oregon in Priority Order3.FacilitatingJobProtectionandBusinessContinuity
A.Relaxpredictiveschedulingrequirementsandenactmoratoriumonpenalties
B.Protectemployersfromincreasedratesandpenaltieswhenemployeesmakeclaimsforunemploymentduetoreducedhoursorbusinessclosures
C.ConsiderprovidingcommercialrentreliefandplaceamoratoriumoncommercialevictionsafterMarch15,2020forthedurationoftheadministrativeaction
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
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
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
Communication
1.EstablishregularlinesofcommunicationbetweenbusinessandOregonleaderstohaveregularupdatesandstrategydiscussionsandcreatesector-by-sectorresponseteams.
2.Createasmallbusinesscrisislinetotriagecallsfromemployerstoaccesshelpfromstateagencies.
3.RequirestateagenciesincludingtheOregonHealthAuthority,BOLI,Employment,Transportation,Lottery,Revenue,andSecretaryofStatetocreatedesignatedresourcesitesforemployers.
QuestionsJasonBrandtPresidentandCEOOregonRestaurant&[email protected]
GregAstleyDirectorofGovernmentAffairsOregonRestaurant&[email protected]