Publications

- June 1, 2020: Vol. 7, Number 6

Hosting the first responders: Select-service hotels are housing essential workers during COVID-19

by JLL

Economy and select-service hotels have emerged as leaders in the hotel sector, housing essential workers on the frontlines of the coronavirus pandemic while taking steps to keep guests and employees safe.

First responders, such as healthcare workers, now constitute a significant portion of the demand in many hotel markets around the world.

“Extended-stay hotels, particularly within the lower-priced segment, are seeing the most demand,” says Geraldine Guichardo, global head of research for JLL’s hotels and hospitality group.

In the United States, these hotel sectors saw occupancy rates in the 40 percent to 45 percent range for the week ending April 4, compared with 20 percent for U.S. hotels overall. Governments, in many cases, are working directly with hotel owners to house workers, and are turning to economy and select-service hotels — including those aimed at extended stays — above other hotel categories.

“Economy and select-service hotels are outperforming in the U.S. from an occupancy perspective due to medical-affiliated demand, including demand from the National Guard,” says Guichardo. “In areas across the globe, these hotels, often located in or near medical centers, provide much-needed private space for essential workers who do not want to risk exposing the people in their homes.”

Select-service and economy hotels mainly draw investor interest from regional owner/operators. The regional nature of the U.S. hotels is especially advantageous during this time, says JLL managing director Al Calhoun, a U.S.-based hotel specialist who has been involved with the select-service hotel segment for 35 years.

“The amount of money it takes to keep an economy hotel or a mid-scale hotel open is far less than what it takes to keep the lights on in a luxury hotel,” Calhoun says.

Closing restaurants or lounges and other common areas, reducing housekeeping visits to rooms where people are isolating, and re-
assigning employee tasks accordingly lower costs while keeping people safe.

“Economy and select-service hotels are positioned to cope better than others since they are built more efficiently and often have a smaller room count, which gives operators tremendous flexibility,” he says.

These advantages could be amplified during recovery, says Denny Meikleham, a hotels specialist and managing director for JLL. Select-service and economy hotels are positioned to recover first. Until then, the focus is on filling as many rooms as they can safely.

“This is a devastating thing that’s happened,” Meikleham says, “but the silver lining is that these operators have found a way to keep some of their properties open to serve the public.”

 

This article was excerpted from a JLL report. Read the complete article at this link: https://bit.ly/2Wrsk1p

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