Boise hotels close, lay off staff as coronavirus causes cancellations, travel declines
Monday morning, the lobby of the Modern Hotel and Bar downtown was a respite for the few unlucky pilgrims still passing through Boise.
A couple on their way back from a canceled ski trip in Aspen each filled a cup of coffee in the lobby before they made the long drive home to Seattle. Another couple stopped in, asking if they could check out later because their flight had been rescheduled to 11 p.m. Polly Evett, the front desk manager, did not charge them for the late check out.
“It’s about kindness right now,” she said.
In any case, the Modern has room to spare. After the Treefort Music Festival announced last week that it would push back from March to September, the Modern’s 39 rooms went from 100% occupied to just 30%.
It was devastating news for The Modern. On Monday, the owner and general manager, Elizabeth Tullis, announced that the hotel and bar would close indefinitely.
In the hotel industry, the impact of the coronavirus is being compared to 9/11 and the financial collapse of 2008. Business travel is suspended. Conferences have been rescheduled, if not canceled. All but the young and unconcerned have nixed their spring travel plans.
“We’re looking at a pretty extended recession in our industry,” Tullis said by phone. “It’s going to be very, very hard hit, and it’s going to take a long time to come back.”
Asked how the COVID-19 pandemic had affected her revenue projections for the year, Tullis laughed miserably.
“I don’t think it’s a good outlook,” she said. “There’s just no telling.”
Preparing for rate cuts
On Friday, March 13, Boise’s hoteliers gathered for an emergency meeting called by the Boise Convention and Visitors Bureau at the Hilton Garden Inn downtown. The general managers and sales people — all of whom had built their careers upon unwavering warmth and hospitality — struggled not to shake hands with one another. Some did anyway.
Seated around a U-shaped conference table, they listened to a previously recorded call with Jan Freitag, a senior vice president of the hotel data firm STR. Freitag gave the diagnosis: Things could get even worse.
In the first week of March, revenue per available room, a key performance metric in the industry, fell 11.6% across the U.S. — the biggest weekly decline since 2013.
Anticipating further revenue losses, the hotels that remain open have responded by discounting room rates.
Some hotels are hesitant to drop rates given historical trends. After the financial collapse of 2008, hotel rates decreased steadily for 19 months straight. It took 37 months for them to recover — nearly twice as long as it had taken to fall.
Price-setting is already a challenge for Boise’s general managers, who are seeing more competition enter the market. Since 2012, nine hotels have opened in Boise, including four downtown: the Inn at 500 Capitol, Hyatt Place, Residence Inn and Hilton Garden Inn. A fifth, Home2Suites, is on the way.
As of last week, Tullis was adjusting her rates twice a day. On Friday, a standard room with a queen bed at The Modern went for $114 a night, 24% less than usual, according to Google.
“It’s something that you have to track constantly in this kind of market, especially since there’s so many hotels downtown now,” she said. “The room increase in the last two years has been phenomenal. We have some big hotels with a lot of rooms to fill.”
Avoiding layoffs as long as possible
The coronavirus hit just as Boise’s hotels were gearing up for peak season, from March through August. The typical hiring spree of seasonal workers has turned into a hiring freeze.
Patrick Rice, executive director of the Boise Centre, told the executives Friday that he would try to avoid layoffs, considering Idaho’s unemployment rate of 2.9%.
“I can’t afford in this market to lose my team,” he said. “I’m going to do everything I can to keep them going.”
Rice suggested that other hotel managers use the next few months to invest in their buildings. He said his team would tidy up the convention center.
“We’re going to do a spit-shine of the whole place,” he said. Perhaps not the best choice of words in the moment, but his message was understood.
At the Modern, Tullis said she is preparing to lay off some of the hotel’s 45 employees, but they will continue to receive benefits during the layoff.
“We’re planning for the worst and hoping for the best, while trying to keep our staff and guests healthy,” she said.
Idaho tourism hurt by the virus
Coronavirus-related cancellations have hurt not just hotels but the entire tourism industry. The pandemic has already caused cancellations and decreased sales at the Boise Airport, which had been poised for another record year after 2019’s record 4.1 million passengers.
For the week ending March 7, sales operations were down about 10%, said Sean Briggs, the airport’s marketing and communications manager. As of Friday, sales were down an additional 20%.
So far, few airlines have canceled routes. United Airlines had canceled two — one to San Francisco, and a new route that would have gone to Chicago. But the airline industry is turning to the federal government for up to $50 billion in help as business plunges.
One hope: More car travel
The airlines’ woes could have one benefit: increased tourism by car.
Four in five Idaho visitors arrive by car. Tourists are less spooked by to travel by car than by plane right now, said Matt Borud, marketing and innovation manager for Idaho Commerce.
“We still have some ability to attract some leisure travel — those folks who are getting a little stir crazy,” Borud told the group on Friday.
The state tourism department, funded by hotel taxes, will run ads in neighboring states with messages about Idaho’s “fresh air” and “fewer people.”
Still, that doesn’t mean Idaho wants everyone flocking to the state in search of more scenic venues for social distancing. Borud said that the state has cut all its broadcast advertising — $300,000 worth — in the Seattle market, one of the U.S. epicenters of the disease.
Borud expressed optimism that the Boise hospitality industry’s recovery from coronavirus would be much faster than it was after 9/11 or the 2008 financial crisis.
“This city doesn’t look anything like it did in ‘01, or like it did in ‘08,” he said. “This city and this state is a completely different place than it was a few years ago, so I hope that sets the pace for recovery.”
This story was originally published March 16, 2020 at 3:47 PM.
