It's no secret that hotels have been struggling since the start of the coronavirus outbreak. Travel restrictions and safety concerns have led to unprecedented vacancies, and while some hotels may have enough cash reserves to sustain themselves through an extended downturn, others may have no choice but to permanently close their doors.
Such is the case for New York City's famed Roosevelt Hotel, which has become yet another casualty of the pandemic. The iconic hotel, which has been around since 1924, announced in October that it will be shutting down at some point this year. And that's a harsh blow for New York City hotels in particular.
A sobering turn of events
The Roosevelt hotel, located minutes from New York City's famed Times Square and Grand Central Terminal, has been a huge part of the city's history. In fact, it served as the election headquarters for Gov. Thomas Dewey when he incorrectly announced his victory over Harry Truman in the 1948 presidential election. The hotel has also served as a movie backdrop for films such as The Irishman.
Now, the Roosevelt Hotel will be closing its doors due to low demand related to the coronavirus crisis. Of course, it's not the only hotel that's taken a hit. The pandemic has decimated the hospitality industry, causing widespread layoffs for hotel staff as occupancy rates have plunged to record lows. In fact, the U.S. leisure and hospitality industry lost 7.5 million jobs in April, reports the Bureau of Labor Statistics, and since then, only about half of those jobs have been brought back.
But losing the Roosevelt Hotel is an especially harsh blow for New York City, which is deep in the throes of a vacancy crisis. Manhattan landlords are growing so desperate they're giving away free rent, while commercial landlords are facing vacancies and untold financial hardships.
Local hotels are feeling the pain, too. In September, Hilton (NYSE: HLT) announced that it would close its 478-room hotel in Times Square.
Of course, travel has been halted globally since the start of the pandemic, but New York City, which thrives on tourism, has become a virtual ghost town in the wake of COVID-19. Not only have city residents already staged a mass exodus, but tourism has declined substantially, fueled in part by quarantine restrictions and the long-term closure of Broadway. It's therefore not surprising to see a famed New York City hotel like the Roosevelt shut down, but that doesn't ease the sting for investors who may be worried that their hotels will be the pandemic's next victims.
Though New York City started out as the epicenter of the coronavirus outbreak, its numbers have improved dramatically since last spring. Still, with cases beginning to surge again both locally and nationwide, it's fair to say that tourism in the city won't be picking up for quite some time, and that could leave hotel investors in quite the unfavorable spot. In fact, hotel operators may already be bracing for a very lean holiday season, and a substantial enough downtick in revenue could cause even more well-known properties to cease operations within the next year.