Finding the New Normal in Hotel Operation After COVID-19

Throughout March, hotels across the U.S. reacted swiftly to the threat of COVID-19.  According to STR, over the next seven weeks approximately 15% of the nation’s hotel inventory closed. And while most properties remained opened, they operated at historically low occupancies.  Occupancy appeared to reach its nadir in April and is gradually improving as many cities and states begin to lift stay-at-home orders. Now hotel owners and operators are strategizing for the anticipated continued rebound in room demand.

Any increase in demand will be inextricably linked to travel factors including airlift, business and personal travel motivations, car rentals, public transportation, disposable and discretionary income among others. The national and global travel and tourism infrastructures must function at synergistic levels for all to succeed. While keeping that in mind, the processes of rebuilding hotel operations in the current circumstances will need to be a balance of safety protocols, financial considerations, and practical experience.

Members of Cushman & Wakefield’s Hospitality & Gaming Practice recently interviewed hotel owners, operators, and asset managers to understand their primary concerns in planning the resumption of operations. Chief among concerns is keeping employees safe while at the same time balancing the needs of hotel guests for safety and service. Additionally, operators indicate that the impact of government relief programs and unemployment benefits, fragmented staffing requirements, and availability of childcare for employees will influence day-to-day operating decisions.  We have aggregated the highlights from our conversations below.*

What triggers may allow hotels to reopen? 

Owners and operators are debating what and if a single event could trigger to reopen or expand staffing. From our discussions, these were the main events to prompt pursuing additional occupancy:

  • Governmental restrictions are lifted
  • Clear governmental guidance for safety protocols are established
  • Market shows signs to support hotel demand
    • For example, most in the industry anticipate that drive-to destinations and airport markets will have the most demand potential in the short-term
  • Hotels that rely on demand for theme parks, convention activity, airports, military operations and the like will not be able increase levels of operations until those specific segments of demand return

How are hotels preparing to open? 

  • Operators are trying to predict at what occupancy level will hotels reopen at—will it be low occupancy (20%-30%)? Or will they reopen to levels slightly below what they achieved in the same period in 2019?
  • Some owners noted that staffing levels for closed hotels and for minimal operations are similar—under 20%. In both scenarios, a skeletal staff covers security, front desk, housekeeping, and maintenance
  • Operators are micro-analyzing the rehiring of employees for each point of incremental increases in demand to determine how many employees will return and when
  • All staff will need to be retrained on the new safety protocols
    • For example, no more physical contact such as handshakes and contactless thermometers for mandatory daily temperature checks upon arrival
  • The entire property, including front- and back-of-the-house, will require deep cleaning and sanitizing. These procedures will also require retraining of staff
  • To maintain costs efficiencies, hotels will need to order supplies in proportion to changes in demand, but also consider current challenges in the supply chain
  • Hotel companies are actively preparing guests for the new protocols by communicating and promoting their safety manuals. Individual hotels will also need to communicate these standards and expectations, but most likely will be conducted on a guest-by-guest basis
  • Operators are establishing protocols on how to respond to a positive COVID-19 test result for hotel guests and employees—issues of disclosure and liability are major concerns
  • Operators are considering new ways to create guest experiences as service levels will be different along the chain scale

What changes should guests expect? 

  • Guest and employee interactions are being redesigned to be as touchless as possible
    • Expect an emphasis on mobile check-ins, mobile keys, texting for services, and cashless/touchless payment systems throughout all areas (check-in, F&B outlets, retail, etc.)
  • Some hotels will require guests to sign Health Declaration forms upon check-in, including information for emergency contacts
  • Some operators are providing masks and hand sanitizer stations throughout common areas
  • Elevator use is being restricted to one person or one family at a time
  • Dictated by government restrictions, protocols for amenities will vary. Examples include the following:
    • Fitness Centers: Some hotels have temporarily closed their fitness rooms. Others have spaced the machines to allow for social distancing standards and provided sanitizing wipes for guests’ equipment usage
    • Pools: Some hotels have closed their pools, while others have kept them open for staycation guests as this may have been be a motivator of the hotel visit. If open, most are reorganizing the surrounding pool lounge spaces and monitoring for social distancing requirements

How are housekeeping protocols changing? 

The majority of hotel operators are following cleanliness guidelines outlined by the CDC and modifying as necessary. American Hotel and Lodging Association is also actively working to provide cohesive guidelines so that operators are following consistent procedures. Some of the new cleanliness procedures include:

  • Extensive cleaning of all surfaces before a guest occupies a room. In some hotels, vacant rooms will sit empty for one to three days before new guests occupy the rooms
  • Increase in sanitizing and cleaning equipment such as disinfecting guns, ionizers, and temperature scanners for employees
  • Limiting exposure of housekeeping staff to guests through reduced stay-over services for occupied rooms and by limiting work in unoccupied rooms
    • For example, housekeeping would provide clean linens and towels in a bag and leave in front of the guest’s door. After retrieving the fresh linens, the guest would replace the bag with used linens
  • Scheduling laundry every few days as occupancy levels dictate
  • Removing all non-essential items from rooms such as minibar items, desk accessories, and decorative objects for more efficient cleaning
  • Occupying rooms on specific floors to provide more efficient housekeeping/service
  • Scheduling housekeeping staff on a staggered basis to prevent overlap and exposure to different employees
  • Evaluating different operating models—for example, less staff back working longer hours or more staff back working part-time hours
  • Deploying public area guestroom bathroom attendants to maintain new cleanliness standards
  • Some industry participants are considering the need for a new housekeeping position such as Director of Sanitation or Cleanliness Services

How will hotel food and beverage services be handled? 

  • To replace sit-down serviced restaurants, hotels are providing pre-packaged grab-and-go options and third-party restaurant delivery services as the primary options. Ultimately, occupancy levels will need to reach a threshold to justify restaurants and lounges reopening with social distancing measures in place
  • Because buffet operations are particularly problematic, reopening this type of service will be a longer-term issue
  • Room service has been suspended at most hotels, and several operators are considering this an opportunity to permanently discontinue
  • Given the uncertainty of group demand and the challenges of food and beverage operations, banquet and catering employees are anticipated to be one of the last employee segments to be rehired

When will larger groups comes back? 

Social distancing constraints indicate that large group demand is anticipated to be the slowest demand category to return. The protocols for types and sizes of group events will continue to evolve and directly impact future group bookings.

  • Some groups are still booked or have rebooked to Q42020 but operators are not confident these will materialize. Meeting planners and hotel operators are actively debating whether it is worth still having certain events at 50% or lower attendance levels. The attitudes and expectations of planners and hotel managers is changing weekly, if not daily
  • For several hotels, groups are robustly booking into 2021, 2022, and 2023
  • The increased use of online meeting apps during the shelter-in-place period has provided a new comfort level with this function which could replace the size and frequency of some in-person meetings
  • Owners and operators are considering different strategies about staffing and location of sales and marketing teams. Do you bring them on when group demand is expected to be slow in the near term, staff up the sales and marketing function to bring groups for future years, or have them available to answer questions/concerns and rebook for another date?

What are current expectations for hotel operating costs? 

  • Hotels with healthy cash reserves will be better positioned to recover more quickly
  • Property taxes and insurance are priorities for hotel owners to keep current
  • Backpay and severance packages for long-term, furloughed or laid off employees can be a substantial strain on cash. In addition, hotels with union labor agreements need to remain current on employee pension funds
  • The refund costs of canceled groups in 2020 is another expected claim on cash
  • Some owners are concerned about an increasing accounts payable balance and the requirement in getting current with vendors to obtain necessary reopening supplies
  • Social distancing fixtures such as barriers at the front desk and new cleaning equipment will be added material costs
  • Interviewees were reluctant to provide expected total costs to reopen though there was a theme that the cost would not be greater than opening a new hotel

One reoccurring theme was that owners and operators consider this an opportunity to change their models and shake off those lingering legacy constraints. The most cited opportunities were:

  • Embracing more technology
  • Reinventing organizational structures and job protocols
  • Re-conceptualizing ever-challenging food and beverage functions
  • Rethinking loyalty rewards
  • Considering a fee structure for service model for functions such as housekeeping


Every change in protocols for the ramp up of operations requires granular analysis of staffing, procedures, and financial implications. All these considerations are anticipated to impact the hotel profitability over the next few years. It remains uncertain if these new operational standards and procedures will be transitional or a permanent pivot—the evolution of airport security after 9/11 might be a good analogue. Regardless of the direction hotel operations take, the desire to travel will always remain strong—the “aspirational guest” has not disappeared.

Market participants generally expect the U.S. hotel industry to reach a bottom in profitability some time in 2020 and begin to recover in 2021, but this will vary depending on location and property type. Because low demand is impacting EBITDA—and with an anticipated uptick in expenses—hotel values have inescapably moderated in the near term. Despite the uncertain environment, however, numerous funds have amassed for acquisitions and investors are poised for transactions in the next few years. The industry is at a critical crossroads. We anticipate that by embracing new ideas and technologies, the industry will create the standards and expectations in a post-COVID world, while recapturing the profitability levels that investors expect.

Elaine Sahlins | Cushman & Wakefield