Skip to Content

‘A really hard year,’ digging deeper into pandemic impact on hotel industry

Remaining Ad Time Ad - 00:00
hotel check in
The Sheraton Madison has added COVID precautions at check-in

MADISON (WKOW) -- 2020 was going to be a banner year for hotels, with the Democratic National Convention coming to Milwaukee and other big events scheduled throughout the year, including football season.

Instead, the pandemic hit and six months later more than half of the state's hotels still have staff laid off. Consumer travel is at an all-time low.

"Business just kind of fell out from under us," said Joshua Paffel, manager of Hotel Ruby Marie.

The historic hotel in downtown Madison saw an immediate loss in most guest stays when everything closed down in March.

"If you were looking at our reservation system, it just went from full system to just a couple rooms dotted here and there and a lot of that happens online so we don't even get the phone calls. You just pull up your system and you see all these reservations kind of disappear from under your feet," he said.

Down the road on John Nolen Drive, even a big company name couldn't insulate the Sheraton Madison from losses.

"The group business was probably the first to go, especially those larger groups, and then naturally the business sector," said general manager Adam Gautreaux. "So we were impacted in both of those areas. One of the only components that remained, from a business standpoint for us, was the leisure sector."

Both hotels have seen guest numbers fluctuate since the initial drop. They had to furlough staff members to stay in business, but neither closed down.

US hotels face continued challenges

Almost two thirds of hotels in the US are at or below 50 percent occupancy right now, according to a report released August 31 by the American Hotel & Lodging Association.

Experts say that's not enough guests to break even and pay debts, though it is up from historic lows seen in April, with an average of 24.5 percent occupancy.

That report found four in 10 American hotel employees are still not working. Only 37 percent of hotels have been able to bring back at least half their full-time employees. 36 percent have been unable to bring back any furloughed or laid off staff.

Hotel vacancies lead to city revenue losses

Fewer guests mean less money for the community. Room tax revenue is collected four times a year from hotels.

In the city of Madison, 70 percent of that revenue is used to pay for tourism marketing and tourism-related development, like operations at Monona Terrace and the Overture Center. The remaining 30 percent goes to the city's general fund for department budgets, according to Madison's finance director David Schmiedicke.

So far in 2020, room tax revenue in Madison is down $3.46 million, or 58 percent, from 2019. Schmiedicke says the city's Room Tax Commission allowed hotels to delay payment of room taxes, to help with the immediate losses seen across the board. The committee decided in July to reduce allocations of room tax revenue by about 50 percent because of the impact of the pandemic on hotel stays.

Second quarter taxes were down $4.3 million, or 85 percent, while first quarter revenues were only down 15 percent, covering months of 2020 before the pandemic hit.

City of Madison room tax revenue data

Schmiedicke tells 27 News room tax revenues could vary between $7.3 million and $8.1 million by the time the year is up. National forecasts predict communities could lose 56 percent of room tax revenues in 2020.

Hotels adapting to survive pandemic

Despite the losses, hotels are finding a way to make it through this difficult time.

Rigorous COVID-19 precautions are helping more people feel comfortable staying at a hotel as fall approaches.

"We had to, of course, change our own practices right away," said Joshua Paffel. "We had to focus on first implementing a new cleaning regime, a whole new way of interacting with guests, and then you had to look at how to retain business in a practical and safe sort of way."

Hotel Ruby Marie is now finding its own pandemic niche, with the space to be able to serve long-term guests for the first time. Plus, it's working with other businesses in the historic building to bring customers a staycation-like experience.

Up North Pub and the Essen House are offering guests at the hotel discounted or free meals with their stay, while the hotel encourages visits to outdoor dining or live music at those establishments.

Paffel says while September would normally bring full bookings for Badgers games and other events, he is still confident Hotel Ruby Marie will be able to ride out the pandemic.

"I think we can," he told 27 News. "I keep falling back on the idea that this hotel has stood here for 150 years. I think we're able to do it, between us and our fellow businesses. We're all kind of able to help each other provide options that not all of the hotels are able to provide."

At the Sheraton, managers hope a two-year remodel project that just finished will be a new draw for customers. The hotel renovated guest rooms, the lobby and rental spaces to provide new features for events and visitors. Now, it's bringing back furloughed employees as customers start returning.

"There's already been a number of guests that we have had that traveled back to the hotel, that have gotten a chance to see the beautiful space," said Adam Gautreaux. "They're excited about being able to return and be here in the future."

The hotel is now working to rebook in the new spaces for hundreds of delayed events, hoping gatherings can return in 2021. So far, about half of those events are rescheduled.

Hotels are finding a way to keep the lights on through the toughest year for the industry.

"As difficult as this stretch has been for us as a property to operate, we're fortunate to be able to have gotten through it, staying open, to remain available for those guests who have been able to travel and be here," Gautreaux told 27 News. "So we're looking forward to what the new year brings for us."

Jennifer Kliese

Weekend Anchor and Reporter, 27 News

Skip to content