CHICAGO – The Illinois Hotel & Lodging Association is calling on elected officials to pass the Hotel Jobs Recovery Plan, which would allocate funds to hotels across the state to rehire workers after more than two years of disruptions brought by the pandemic. Previously a vital contributor to the state’s hospitality economy, hotels have been devastated following numerous setbacks, with the industry not expected to recover to pre-pandemic levels until 2025. When it comes to occupancy rates, throughout January 2022 Chicago was the worst performing market of any major city in the U.S.
Nationally, hotels have seen $111.8 billion in losses tied to room reservations, not including further losses associated with a decline in convention and event rentals. The Hotel Jobs Recovery Plan (HB5690 and SB4184) is essential to jumpstarting the industry and getting people back to work. The plan calls for allocating $250 million in federal American Rescue Plan Act (ARPA) funds to provide a one-time grant of $1,500 per room for every hotel in the state.
“The loss of revenue from hotels during the pandemic has delivered a huge blow to the state, and the industry needs our help,” said House Majority Leader Greg Harris, who is sponsoring the legislation. “With the federal funds we’re requesting, the hotel industry will be able to start a very long recovery that will not only add more jobs but hopefully help to bolster the tourism industry in the city and state.”
Representing just 3 percent of the total APRA funds the state received, 80 percent of the funding would be required to be used for payroll costs including wages and benefits for employees – a majority of whom come from Black and Brown communities across the state. Further, the proposal stipulates that special consideration for funding be given to minority-owned businesses, women-owned small businesses, disability-owned business enterprises, small, disadvantaged businesses, and veteran-owned small businesses.
“The pandemic-related drop in tourism doesn’t just affect hotel business owners, but also the dedicated hotel employees who have lost their jobs during more than two years of record-setting low occupancy rates,” said Sen. Elgie Sims, who is carrying the proposal in the state Senate. “The time is now to help the industry get back on its feet.”
The pandemic’s impact on the hotel industry has been startling:
- Hotels have sustained huge losses in occupancy for more than two years now, with occupancy in Chicago hotels hitting a very bleak 14.6 percent in December 2020 and never fully recovering.
- This January was especially rough on Chicago’s hotels, with the occupancy rate averaging around 25 percent as many Chicagoans battled the omicron variant.
- On average last year, Chicago’s hotel occupancy rate hovered around 44 percent, with hotels statewide averaging at just 47 percent occupancy rate.
- The state lost $5.4 billion in room revenue in 2020 and 2021, including more than $1 billion in state and local tax revenue.
- Illinois also lost 40 percent of its hotel jobs from 2019 to 2021, according to the American Hotel & Lodging Association.
“It will take years for hotel operators like myself to recover from the damage caused by the pandemic, which forced us to lay off workers and dig into our own pockets to make ends meet,” said Darin Dame, general manager and co-partner of SpringHill Suites by Marriott in Springfield. “We need help now to bring back staffers and restore some stability back to an industry that’s essential to the state.”
Hotels have historically served as an anchor for Illinois’ economy, generating $4 billion a year in state and local taxes due to the hotel occupancy operators’ tax the largest growing source of tax revenue for Illinois pre-pandemic. Further, the industry once supported more than 290,000 jobs and generated $16 billion in wages and salaries.
“No industry in Illinois has been hit as hard during the pandemic as the state’s hotels. With most hotels owned by franchisees who live and work in the communities they serve, they cannot afford these sustained losses even as operating costs continue to grow due to inflation,” said Michael Jacobson, president & CEO, Illinois Hotel & Lodging Association. “With occupancy rates still nowhere near where they were in pre-pandemic times and convention business, one of our main tourism drivers, stagnant, our hotels are in dire need of aid to rehire workers and fully reopen their doors.”
According to the Illinois Department of Revenue, hotel operators’ occupation tax receipts this year are still 30 percent lower than pre-pandemic totals in 2019. The tax is one of most severely impacted during the pandemic. The department has said the numbers are expected to remain below pre-pandemic totals for the foreseeable future.
“While we are optimistic that we’ve seen the worst of Covid-19, the loss of revenue from years of canceled conventions will continue to trickle down and affect the hotel industry,” said Anwar Martin, general manager of the DoubleTree by Hilton hotel in Bloomington. “The Hotel Jobs Recovery Act is an essential lifeline for our industry and one that will give us a chance to get back on track sooner than later.”
ABOUT THE ILLINOIS HOTEL & LODGING ASSOCIATION
The Illinois Hotel & Lodging Association (IHLA) serves as the essential resource and unified voice for advancing the lodging industry across Illinois. Consisting of more than 500 hotels and their employees throughout the state, IHLA advocates the industry’s position on political, legislative, and regulatory issues that have the potential to impact the success of Illinois hotels. For more information, visit http://www.illinoishotels.org.