Business Travel Briefing
For March 19-March 31, 2020
The briefing in brief: The hotel industry is getting slammed, too. Airports are empty. Here are the day-to-day numbers. Italy nationalizes Alitalia. American and Virgin Atlantic drop key routes permanently. Customs stops processing Global Entry applications. State Department halts most passport services. And much more.
THE HOTEL INDUSTRY IS GETTING SLAMMED, TOO
My bad metaphor about business travel is that the airlines drive the bus. They get the bulk of the blame and credit--and almost all of the publicity. But the Coronavirus Collapse is hammering the hotel industry around the world--and it has begun to bring domestic lodging to its knees. In the last two weeks, nationwide occupancy has fallen more than 20 points, nightly rates are plunging--and the outlook is dire. According to figures released by STR, the best-known hotel research firm, nationwide occupancy fell 7.3 points during the first full week of March. Last week, occupancy plummeted 24.4 points compared to the second week of last year. About half the nation's hotel rooms were empty last week. Revenue per available room (revPAR), a key indicator of lodging health, has fallen off a cliff, down more than 30 percent. Citywide occupancy in Seattle, one of the first U.S. Coronavirus hotspots, fell below 33 percent. In New Orleans, average daily rate has declined by nearly 25 percent. In San Francisco, occupancy has fallen below 40 percent and it's below 50 percent in New York. Hotels are beginning to put the key in the door, too. In San Francisco, for example, at least a half dozen properties are closed, including the W Hotel. More Bay Area hotels will close in the weeks ahead as the area's shelter-in-place rules take hold. The current estimate of occupancy is 10 percent, according to a San Francisco hotel trade group. Meanwhile, Marriott has closed dozens of properties it manages across the nation and has begun mass layoffs. And it can't be good for Hawaii hotels that governor David Ige has told visitors to stay away from the state for 30 days. Meanwhile, most of the casino-hotels in Las Vegas have shut down.
YES, AIRPORTS ARE EMPTYING OUT. HERE ARE THE NUMBERS.
If you were actually in an airport this week, you couldn't help but notice closed lounges, empty shops, shuttered dining facilities--and the lack of lines at security checkpoints. But the numbers are actually breathtaking. The Transportation Security Administration, never known for its friendly, customer-facing policies, has nevertheless done us a great service. It now posts daily screening volume on a special page
. On March 1, for example, the TSA screened 2.3 million flyers nationwide, a slight increase over a similar day last year. It's all downhill from there. All of the 16 other days listed by the TSA as of 8pm this evening (March 19) have shown increasingly steep declines. By Tuesday (March 17), screening fell below one million passengers. That's the lowest number of travelers since February 1, 2011, when much of the country was buried in snow
. It was May, 2004, when a normal day's volume was below a million passengers.
WHEN 'NORMAL' RETURNS, THIS STUFF WON'T ...
It's difficult--if not impossible--to keep track of what's falling off the travel map. Maybe just assume everything is shutting down. That said, when things get back to "normal"--whichever "new normal" we'll be on--many flights, hotels and travel services will return. But we know routes below are gone forever:
has permanently cancelled its Miami-Cordoba, Argentina, route. American also is grounding forever its Boeing 767s and says its few remaining Boeing 757s will be retired before next year.
is abandoning its route between Newark and London/Heathrow. Remaining flights from the New York area will operate via Kennedy Airport, where its master, Delta Air Lines, maintains an international hub.
ITALIAN GOVERNMENT WILL NATIONALIZE ALITALIA
The first thing to remember is that the current iteration of Alitalia
is actually only 20 years old. It was created from the forced merger of the original Alitalia (founded in 1947) and Air One, a Milan-based carrier that had a brief and mostly successful run in the 1980s and 1990s. The one constant is money: Alitalia never makes any. The current Alitalia has been in administration--a European form of bankruptcy--since 2017. It's been burning through billions of government support and unable to find a buyer. (Lufthansa, Delta and Air France/KLM have all passed.) Even in the chaos of the of the country's Coronavirus misery--the death toll has passed 3,400 and the entire nation is locked down--the Italian government is inexplicably trying to save the airline again. On Tuesday (March 17), it nationalized the carrier and is injecting another $5 billion to keep it running. If things ever get back to normal, Italy plans to refloat the airline as a private carrier. By the way, all of the Alitalias have only made a profit in one year since 1947.
Hawaiian Airlines won't be doing a joint-venture with Japan Airlines
after all. The Department of Transportation nixed the scheme this week although it will permit the two airlines to code-share.
CBP STOPS GLOBAL ENTRY, PASSPORT SERVICE RESTRICTED
U.S. Customs shut down operations of all Trusted Traveler application centers today (March 19) until at least May 1. That includes access to the off-airport public centers that process Global Entry applications and Canada/Mexico operations such as NEXUS, SENTRI and FAST. One thin silver lining: CBP's Enrollment on Arrival program remains operational. If you're conditionally approved for Global Entry, you can complete your application at any of the 60 airports that offer the service. But better hurry: Customs agents tell me they expect most airport-based offices to close soon, too.
Passport applications and renewals
have been suspended. The State Department says only emergency travel within three days of departure will be considered for service. See here