Prairie State Wire

Michael Jacobson calls it job security – “exhausting job security.”

Jacobson, the president and CEO of the Illinois Hotel & Lodging Association, said hotels are making progress as they recover from the economic devastation caused by the COVID-19 pandemic. But he said although things are looking up, there’s a lot of work to be done to return to former levels.

“Nothing compares. Every data point shows you the absolute worst year on record,” Jacobson told Prairie State Wire. “Of course we’ve had tough times or tough periods before. You look at after 9/11, you look at during the 2008 economic recession. There’s been challenging times. Nothing compares to what the industry saw over the last year.”

Jacobson was named to lead the Illinois Hotel & Lodging Association in October 2018. There are 1,500 hotels in the state and one-third belong to the association.

Before coming to the IHLA, he worked at the U.S. Travel Association for eight years, focusing on grassroots advocacy and political engagement initiatives. Jacobson said regulatory and legislative issues have been his field of expertise.

In the last year, he has had to expand that as the pandemic presented unprecedented challenges. Spring 2020, as travel nationwide came to an almost-complete halt, was the nadir, Jacobson said. Cooler weather also kept people at home, and the hotel industry was hit hard.

“Right around this time last year was rock bottom,” he said.

Small upticks in the summer helped and inspired cautious optimism, but the industry has yet to fully recover. Still, occupancy rates are up and hotels have lowered their rates.

“You’re going to get a bargain in hotels in the next year or two,” Jacobson said, calling it an “incredible opportunity” for travelers. The industry is focusing on customers within a 90-mile radius, he said.

“We’re taking a much more regional approach,” he said. “People are more comfortable driving with their families rather than getting in places. There’s definitely some pent-up demand in terms of people wanting to get out and hit the road again. The focus is all things leisure travel. As people get vaccinated and they feel safer, they are hitting the road.”

It’s a promising development but that doesn’t mean matters are back to normal.

“We’re still a long off ways off from where we typically would be in March or April,” Jacobson said. “We don’t anticipate fully recovering to pre-pandemic levels until 2024 at the earliest.”

Some states and some markets are recovering much faster, he said. Florida may not have handled COVID-19 as well as it could have, but the state’s hotel business is nearly back at full strength.

“Our reopening approach has been far more cautious,” he said.

For example, hotels in downtown Chicago were hit extremely hard since they rely on meetings and conventions, he said. They shut down at a far higher percentage than other hotels in the state.

“And that’s going to be one of the last things to come back,” Jacobson said. “You look at all the Restore Illinois restrictions that are still in place, there’s few areas that are more restricted than around meetings or trade shows.”

More than 50 hotels closed during the pandemic, as occupancy rates dropped below 10% at the worst. About 20 hotels that rely on large conventions are still closed.

There is growing pressure on hotel owners from their lenders, Jacobson said.

“Banks don’t want to repossess these buildings,” he said. “They don’t want to own hotels, they don’t know how to own hotels and they don’t know how to operate hotels. They don’t want these distressed assets on their books. So for the first year of the pandemic, they were very lenient. They had a lot of forbearance the first year.

“Now that we’re a year into this, and some hotels are still in the red, not making money, now they are knocking on the doors far more aggressively saying it’s time to start paying up.”

There “absolutely” will be permanent closures and foreclosures, Jacobson said. It’s just a question of how forgiving banks are. But the road ahead looks much smoother than the detour hotels were forced to take.

Hotels received money from a state business interrupted grant and some could apply for PPP loans, he said, but they haven’t received the federal assistance that other industries did, he said.

“It’s becoming very clear we are going to be one of the last vendors to recover from this,” he said.

Jacobson noted that Illinois hotels lost 21,000 jobs in the last year, but affiliated companies were forced to cut workers as well.

“There’s so many other jobs that go into supporting hotels,” he said.

Another worry is the people whom hotels employ. They pride themselves in the fact that 63% of Illinois hotel employees are people of color, which means those communities have been hit hard by the economic damage inflicted upon hotels.

Illinois will receive $7 billion from the American Rescue Plan. The IHLA noted that portion of funds are designated for travel and hospitality. Jacobson said they are floating ”a hotel jobs recovery plan” with state leaders and requesting a short-term cash infusion.

Hotel restaurants, bars and gift shops also will resume sales, but Jacobson said they also will be changed.

“A lot of depends on if the government allows them to do so,” he said. “Will they reopen at their pre-pandemic capacities? Probably not, but not by choice.”

As restrictions are loosened, hotels will get busier. But a recent uptick in hospitalizations means they won’t be eased for a while.

As hotels become busier, there is yet another challenge: Finding people to fill jobs and get hotels up and running.

“What we’re hearing overwhelmingly across the state right now, and this isn’t unique to just Illinois by any means and it’s also not unique to hotels, it’s every industry — it’s been incredibly hard to hire people,” he said. “People aren’t ready to come back to work for a variety of reasons. Some just don’t feel safe yet, especially if they are not vaccinated. Some are making a pretty good living on unemployment, especially with the $300 supplement the government’s giving right now. There’s an extreme labor shortage right now and really big challenges getting people to come back to work. There’s jobs out there and there’s not a lot of people willing to fill them.”

But the hotel industry is adapting. It will do so to convince people to come back and check in. Cleaning and safety enhancements have been made and will continue, Jacobson said.

“Those aren’t going away,” he said. “Some of the precautions and protocols put in place may never go away. A lot of those changes are absolutely permanent.”