Half of R.I.’s hotels will close by mid-2021 without help, hospitality leader says

Half the hotels in Rhode Island will close by the middle of next year if they do not soon receive “substantial” government aid to help recover from the pandemic recession, said Farouk Rajab, chairman of the Rhode Island Hospitality Association.

Rajab said no specific amount of aid has been requested from the state. But he said the Rhode Island Commerce Corporation is researching assistance for the industry and one figure he has heard discussed is $35 million.

Any state aid could come from federal money already allocated to Rhode Island under the CARES Act. A second source of federal aid to the hotel industry could come from pending legislation in Congress.

Rajab said he knows there are many competing requests for aid from other industries damaged by the coronavirus and government restrictions that have been enacted here and across the country to curb the spread.

But he argues hotels and other affiliated industries such as restaurants and suppliers are keys to the health of the economy.

“Nobody will survive this without stimulus money,” he said in an interview.

“It will be quite a competition, but when everybody lines up at the door at Commerce, tell me which other industry is down 85%,” he said. He referred to the amount of revenue he said a typical hotel has lost this year.

Commerce Secretary Stefan Pryor could not be reached for comment.

During her briefing on the coronavirus last Wednesday, Gov. Gina Raimondo said, “Our economic crisis is as brutal as our health crisis.”

She noted the struggles of the hotel and hospitality industries and the calls to distribute more of the $1.25 billion in federal CARES Act funding that Rhode Island has received. Some of the money already has been committed, but it is unclear how much is left.

“I have to balance all the interests in a sea of uncertainty,” she said. She added it is not clear if the year-end deadline for using the money will be extended, what the rules are for distributing the money and whether Congress will pass another stimulus bill.

She said some of the money may be needed to fill a state budget gap that earlier this year was estimated at $877 million.

The Rhode Island Hospitality Association represents about 700 members in the lodging, restaurant and tourism industries. There are about 230 hotels in the state, including inns and other lodgings.

Before the coronavirus outbreak seven months ago, the hotel industry employed 5,129 workers directly and 19,548 indirectly, according to data from Oxford Economics, a research firm.

In September, the industry had lost 1,954 jobs directly employed at hotels and 4,516 in indirect jobs, according to the study..

Rajab, who has been general manager of the Providence Marriott Hotel since January 2017, said employment at the downtown hotel is down to 50 from 250 before the pandemic.

He said the hospitality association opposes a proposed city ordinance in Providence that would require hotels that closed during the pandemic to, once they reopen, offer positions to laid-off workers before hiring new workers.

About 700 hotel workers have been laid off in Providence, said City Council Majority Leader Jo-Ann Ryan, a co-sponsor of the ordinance, which has won initial approval but requires a second OK to take effect.

“Our energy should be focused on how we help business recover and not on more business restrictions or obstacles,” Rajab said, “It’s hard to understand the logic behind it.”

He added the industry is already heavily regulated and taxed in Providence.

Rajab said revenue at the Providence Marriott, which has 354 rooms, two dining facilities and meeting rooms, is off 85% this year and that such a loss is typical at other hotels and lodgings across the state.

He said the damage to hotels weakens the overall economy because food and other suppliers also lose business. He said banks and insurance companies could also be affected if hotels go into foreclosure or shut their doors and can’t pay their debts. Rajab did not identify any hotels that are in danger of failing.

The Graduate Providence and Omni Providence have been closed with no reopening date.

Rajab said the $50 million set aside for the state’s Restore Rhode Island program, which recently was simplified and expanded to $30,000 grants for mostly smaller businesses, has provided little help to the hotel industry.

“The $30,000 doesn’t really make a dent in the problem,” he said, “We really need to think big to save businesses that are losing millions of dollars.”

Dale Venturini, president and CEO of the Rhode Island Hospitality Association, said the industry is lobbying for direct federal stimulus funding for hotels because there may not be enough state money available to help hotels resume full operations.

“Our hotels are in survival mode,” Rajab said.