Lodging Leaders

The coronavirus crisis has put unprecedented amounts of stress not only on health care systems and economies but on workers’ mental health.

That’s the first and bottom line of a recent study by the Society of Human Resource Managers.

The professional association surveyed more than a thousand workers in mid-April and found that nearly half feel emotionally drained from their work. The younger the employee, the more likely they feel burned out.

Employees who feel totally sapped of energy are more prone to depression.

As state and local economies reopen amid the threat of COVID-19, citizens are getting back to daily living. But people are not the same as they were before the pandemic struck, experts say, and the nation’s workplaces may be where mental health issues become most obvious.

In this episode of Lodging Leaders, we focus on mental health in the workplace – particularly the hospitality industry which has been dramatically impacted by the coronavirus pandemic.

Featured in this report are Silpa Patel, a hotelier in Tennessee who has battled depression and now works with behavioral health organizations to eliminate the stigma of mental illness; Darcy Gruttadaro, director of the Center for Workplace Mental Health at the American Psychiatric Foundation in Washington, D.C.; Wendi Safstrom, executive director of the Society for Human Resource Management Foundation in Alexandria, Va.; and Marjorie Morrison, co-founder and CEO of Psych Hub in Nashville, Tennessee.

In June, Watermark Lodging Trust, a Chicago REIT, sold its Hutton Hotel in Nashville for $70 million. The price is $7 million less than what the REIT said it paid to acquire and upgrade the hotel seven years ago.

A month later, Watermark said it signed a deal in which it sold shares worth $200 million to a joint venture between Ascendant Capital Partners and Oaktree Capital Management.

The influx of cash will be used to keep Watermark in business and give Ascendant and Oaktree preferred equity positions. Watermark will pay the JV a 12 percent annual dividend rate.

The activity is a harbinger of what’s to come as hotel owners struggling to stay afloat amid the economic downturn caused by the coronavirus pandemic may soon be forced to sell their assets at a discount or borrow money to keep paying their mortgages.

In this episode of Lodging Leaders podcast, we explore what opportunistic investors might have in store as the lodging industry faces the possibility of mortgage defaults.

We talk to financiers who are stepping up with what they call “rescue capital” to help owners get to the other side with their businesses intact or be among the first to reap a return if an asset is forced to go to market. And we talk to asset managers who advise on how to position your hotel to either survive the crisis or go to market.

Our report features Amanda Chivers, managing principal at Crown Hospitality Consulting in Atlanta; Evens Charles, president and CEO of Frontier Development & Hospitality Group in Washington, D.C.; David Turley, principal at Cronheim Hotel Capital in New York City; and Brian Waldman, executive vice president of investments at Peachtree Hotel Group in Atlanta.

As the hospitality industry struggles to mitigate the massive loss of revenue caused by the coronavirus pandemic, hundreds of hotel owners are filing lawsuits to force their property insurance providers to cover their financial casualties.

Meantime, state and federal lawmakers are considering legislation that would mandate U.S. insurance companies pay for business losses related to COVID-19.

Such a payout could surpass $600 billion, reported Best’s Insurance in May.

American Property Casualty Insurance Association, a trade group, puts the payouts even higher. In June, the association reportedly estimated payouts to would cost insurers $255 billion to $431 billion a month.

The amounts are not sustainable and would ultimately make many insurers insolvent, say insurance industry experts.

Hotel owners say they deserve payouts because they’ve paid premiums for years to cover high-loss scenarios such as the one they’re facing now.

In almost every case, insurers are refusing to pay, saying policies exclude losses caused by a viral plague or COVID-19 has not caused any physical damage to hotel properties that result in a stoppage of business.

It’s fixing to be an epic battle.

In this episode of Lodging Leaders, we examine the issue of business interruption insurance for hotels negatively impacted by the coronavirus pandemic.

We feature Sanjay Patel, CEO of MHG Hotels in Indianapolis who has filed a lawsuit against his insurance provider; Robert Zarco, a partner at the law firm Zarco Einhorn Salkowski & Brito in Miami who specializes in litigating business interruption insurance claims on behalf of business owners; Gregory Riehle, a lawyer and hospitality consultant and former CEO of the Resort Hotel Association, a hotel insurance group; and Robert Hartwig, Ph.D., a clinical associate professor and director of finance at the Center for Risk and Uncertainty Management at the University of South Carolina’s Darla Moore School of Business who’s co-authored a white paper about the un-insurability of businesses affected by viral pandemics.

We’re trying something different today.

We’ve teamed up with a group called Next Generation in Lodging, a diverse team of mid-career hospitality professionals who want to have significant input into the future of the hospitality industry.

We’ve worked with them to produce and provide a platform for a panel discussion about diversity and inclusion in the hospitality industry.

We featured the Next Generation in Lodging co-founders in episode 275 that reported on the hacking of their Inclusion is a Unicorn Part 1 webinar on Zoom. We also explored the social awakening taking place throughout the country and the manifestation of inequality in the hospitality industry.

Today, we’re bringing you Inclusion is a Unicorn Part 2.

The returning panelists are Ashli Johnson, assistant dean at the University of Houston’s Conrad N. Hilton College of Hotel & Restaurant Management in San Antonio, Texas, and founder of Hospitality Leaders of Today, a non-profit dedicated to identifying and developing minority leaders; Tejal Patel, founder, president and CEO of Neem Tree Hospitality in League City, Texas; and Aron LeFevre, director of human rights for World Pride: Copenhagen 2021.

The conversation is rich with honest sharing on issues the industry might view as sensitive or uncomfortable.

Since the beginning of March, the hotel industry has lost more than $40 billion in room revenue. Hotels continue to lose $400 million every day, according to STR and Tourism Economics.

The historic loss of income caused by the coronavirus pandemic is rendering hotel owners unable to pay their property mortgages.

While many have worked out payment deferments with their local and regional lenders, thousands of other owners indebted with commercial mortgage backed securities or CMBS loans have no such recourse to stave off financial ruin.

Out of the $300 billion in CMBS loans in the U.S., hotels comprise $86 billion in debt.

Trepp reports that at the end of June the overall CMBS delinquency rate was more than 10 percent. Hotel loans account for one quarter of that and most of those are in the hands of special servicers, agents who manage delinquencies on behalf of the CMBS bond holders.

Negotiating relief is not an option in the CMBS world. This means thousands of hotels may soon go into mortgage default and the industry may experience a record level of foreclosures this year.

In this episode of Lodging Leaders podcast, we update the status of the hotel industry’s efforts to come up with a rescue plan for CMBS debtors. We talk to Ash Patel, CEO of Southwest Hospitality Management who is a partner in a new venture to manage distressed hotels. Also featured are Vimal Patel of Q Hotels in Louisiana who has two properties financed with CMBS loans, and Girish Patel, principal and managing director at NewGen Worldwide, and Kyle Walker, CEO at NewGen, who are among those in the industry actively lobbying Congress for a solution to the CMBS puzzle.

In the introduction of his book, “Hotel, an American History,” A.K. Sandoval-Strausz writes: “The hotel as we know it today did not evolve randomly or naturally, nor did it develop as some sort of automatic response to structural needs. Rather, it was the deliberate creation of an identifiable group of people who lived in a specific place and time.”

Hotels, he writes, are an artifact of an epochal shift, an important period in history. At the same time, the hotel is a microcosm of key challenges of modern life.

In the year 2020, we are living in an unprecedented, and therefore historical time.

America’s hotels are telling the stories of the coronavirus pandemic and its impact on the economy and the people who depend on a thriving hospitality industry for their welfare.

It is the hotel’s designers who help tell a story through branding, architecture and interior design.

This episode of Lodging Leaders explores what designers are doing to help hoteliers reimagine their properties in an age of heightened consumer awareness of health and wellness.

We feature Alpa Patel, founder and CEO of Spaceez, a web-based interior design company that caters to motels and hotels in the economy and midscale segments; Patti Tritschler, founder and CEO of Interior Imaging Group, an interior designer for branded and boutique hotels; Roger Hill, CEO of The Gettys Group, and his colleague Ron Swidler, the global hotel design firm’s chief innovation officer; and Steve Palmer, managing partner at The Indigo Road Hospitality Group, who focuses on the company’s restaurants and F&B concepts.

Many companies in the hotel industry claim they practice diversity in their hiring practices. When questioned about how many Black people they employ, most companies can back up their hiring outcomes with data.

That’s all well and good, but what’s missing in most employment demographics is a measurement of how inclusive the company is not only in its rank-and-file but also across all levels of leadership.

A new study that measures inclusivity reveals what we really all know: The hotel industry in America has few Black people in senior leadership roles. And even the most “woke” companies dramatically fail in providing opportunities for Blacks to move up the ranks.

The good news is as the hospitality industry begins a comeback from the economic crisis caused by the coronavirus pandemic, companies have an opportunity to mend their ways and revise their hiring and promotion practices to leverage the diversity they’re so eager to claim.

In this episode – a continuation of our coverage of racism, diversity and inclusion in the hotel industry – we talk to experts who are on the front lines of gender and racial equality in business. We highlight two new studies that could very well pave the way for a change in how hospitality businesses bring back and reposition their workforces as the U.S. economy emerges from the COVID-19 pandemic amid an historic re-awakening on Black lives and civil rights.

Imagine holding a conference on racism, diversity and inclusion in Corporate America and seeing your event invaded by outsiders shouting racial epithets and vulgarities while flying both the Nazi and American flags.

Actually, there is no need to imagine it because it happened earlier this month during a digital event organized by the founders of a group called Next Generation in Lodging.

The webcast was the second in a series in which Next Generation in Lodging is examining how the U.S. hospitality industry can truly and effectively address racism among its ranks and propel diversity and inclusion from the front lines to the C-suites.

In this episode, Lodging Leaders talks to organizers of the web event about the startling and frightening infiltration of what they believe are white supremacists into their digital conference.

We also talk with the founders of Next Generation in Lodging about the racial unrest and awakening taking place throughout the country, what the message of inequality and systemic racism means to the hospitality industry and where the industry should go from here.

Imagine holding a conference on racism, diversity and inclusion in Corporate America and seeing your event invaded by outsiders shouting racial epithets and vulgarities while flying both the Nazi and American flags.

Actually, there is no need to imagine it because it happened earlier this month during a digital event organized by the founders of a group called Next Generation in Lodging.

The webcast was the second in a series in which Next Generation in Lodging is examining how the U.S. hospitality industry can truly and effectively address racism among its ranks and propel diversity and inclusion from the front lines to the C-suites.

In this episode, Lodging Leaders talks to organizers of the web event about the startling and frightening infiltration of what they believe are white supremacists into their digital conference.

We also talk with the founders of Next Generation in Lodging about the racial unrest and awakening taking place throughout the country, what the message of inequality and systemic racism means to the hospitality industry and where the industry should go from here.

In the first quarter of this year, more than 140 new hotels opened in the U.S., reported Lodging Econometrics.

In March, the U.S. had 150,000 rooms under construction, said STR. It’s the highest end-of-month total the company has reported.

Jan Freitag, senior vice president of lodging insights at STR, said he expects hotel construction to continue throughout the year. But because of the low customer demand caused by the coronavirus crisis, hotel developers are not in a rush to open and projects will spend more time in construction.

Also impacting the timelines are the availability of building materials due to supply chain disruptions and challenges in finding skilled laborers who want to work during a pandemic.

This episode of Lodging Leaders podcast looks at the current state of hotel construction and explores what the future might hold with regard to new development in the shadow of COVID-19. We interviewed construction company executives and hotel developers to get an idea of the challenges they’re facing in getting a job completed and opened.