#1 – Cruise Lines – It was just announced last week that the cruise industry will continue to be shut down until at least September 15 for cruises sailing from U.S. ports. Some suggest that social distancing protocols make the cruise industry unprofitable until a vaccine is available which might be a year or more away. Cruise lines are hemorrhaging as much as $750 million a month. It may take them 5 years to recover. Carnival Cruises stock has lost more than two-thirds of its value. The cruise industry may be the most impacted of anyone with no light at the end of the tunnel.
#2 – Airlines – The airline industry was literally completely shut down in April with minuscule improvement in May and June. Thousands of jets are parked around the world with the knowledge that hundreds of older aircraft will probably never fly again. It appears that domestic flying will start to pick up in July with some airlines increasing to about 50% of their pre-COVID flight schedules. The good news for the airlines is there does appear to be some pent up demand, however, even the airlines are predicting the recovery could be a year or two away. Federal grants are keeping the airlines alive and their staff employed today. However, they run out of federal money in September/October so I expect massive layoffs to hit the industry this fall.
#3 – Hotels – Hotel occupancy dropped like a rock in March and thousands of hotels shut down because of COVID-19. The hotel industry had reached its zenith in 2019 after about a 10-year increase in the number of hotel rooms and prices around the globe. Using cheap money to build, new hotels sprung up like mushrooms on every corner. With travel down an estimated 50% for the rest of 2020, many hotels will go belly up. I think limited-service hotels that cater to vacation and auto travel will actually come out better than the giant convention hotels that have seen all their business meetings drop to zero. Airport hotels will also be desperate for business as business travelers will be the last ones to travel again. The silver lining for travelers is that prices should be a great value for the next year.
#4 – Hawaii – The government of Hawaii has basically shut down travel to the islands. They require a 14-day quarantine upon arrival which makes a vacation there impossible. Hawaii is almost 100% dependent on vacation travel for all their income and over 300,000 people are without jobs because of the shutdown. How would you like to own a hotel in Hawaii today?
#5 – Hotel breakfast buffets – Health department rules have put the kibosh on breakfast, lunch, and dinner buffets in restaurants, hotels, and of course cruise lines. Many hotels who offered complimentary breakfasts with your stay are substituting a grab and go bag with yogurt, a breakfast sandwich, and fruit, etc. which is nice but not as homey as a good old fashion hot breakfast. One of the world’s greatest feasts is a buffet breakfast at a great European or Asian hotel. I hope some kind of work-around can be figured out to prevent the breakfast buffet from going extinct.
#6 – Airline $200 change fees (a good thing to see go away) – All the airlines because of COVID-19 health protocols are requiring everyone to do a health self-evaluation prior to getting a boarding pass for your flight. If you self-report you have had a cough or sore throat in the last 14 days you are able to reschedule your flight without paying a $200 change fee.
# 7 – Hotel resort and destination fees (another good thing to see go away) – Las Vegas was one of the first destinations to see the widespread use of hidden $25 to $75 a day resort and destination fees tacked on top of your hotel room rate. Vegas was bludgeoned by COVID-19 and still can only have 50% of the people back in casinos. Many hotels have dropped the dreaded resort fee to try to coax people back to Sin City. Let’s hope this is the end of the hated hotel resort and destination fee.
#8 – Sit down restaurants – COVID-19 has been a giant nightmare for the hundreds of thousands of small business owned restaurants around the world as health protocols shut down restaurants for the last 90 days and are just now reopening. Even those able to be reopened have social distancing guidelines that prevent them from having more than 50% of the customers than normal. You can expect up to 50% of restaurants to never open back up or fail in the next 6 months as they will simply run out of cash. Even in good times, restaurants had a high casualty rate. Now it is catastrophic.
#9 – Rental Car companies – Hertz Car Rental was the first giant casualty of COVID-19 as they declared bankruptcy just a few weeks ago. A lot of the small car rental companies will not be around very long as they don’t have the capital for staying power. I expect National/Enterprise to be the big winner as they have the people and resources to outlast the virus. It will be painful for everyone in this space. The good news is that we are seeing a lot of people who normally would fly shorter trips (600 miles or less) rent a car and save the hassle and possible health risks of flying.
#10 – Foreign travel – Some people can’t wait to spread their wings and explore foreign lands after being contained for months at home while others want to be more cautious and stay closer to home. Many expect international travel to be the slowest to return to normal after this pandemic. Travel to Mexico, Canada, and the Caribbean will come back sooner followed by Europe. China may take years to return.
#11 (bonus) – Business conventions and meetings – Almost every convention and business meeting has been canceled this summer and into the fall. Basically these are places with lots of people that make it difficult if not impossible to social distance. I would hate to own a convention center connected to a hotel for the next two years. Small meetings are already gravitating to online Zoom formats which lowers travel costs and holds lower health risks.