Illinois hotel owners optimistic about hotel industry recovery, but business travel still lags

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SPRINGFIELD (WGEM) – Hotel owners across the country hope to see the hospitality industry fully recover from the economic losses of COVID-19 by 2024. Hotels in Illinois have seen a significant increase in travel from pleasure during the summer months, but many owners still expect a boost from business travel.

Illinois Hotel & Lodging Association President and CEO Michael Jacobson said the state continues to see metrics increase each month. Jacobson said Illinois saw hotel occupancy hit 72% in June, beating the 70% occupancy rate nationwide. He noted that things are looking much better for Illinois hotels than they have in the past two years, but occupancy levels have not returned to the rate seen in 2019.

HOTEL OCCUPANCY RATES JUNE 2022 (STR DATA)
70% United States
72% Illinois
71% Bloomington
65% Springfield
65% Rockford
64% Quincy
60% Champagne
58% Peoria

Family leisure travel is expected to decline over the fall and winter months, but Jacobson is excited to see more business travel for meetings and conventions soon. The Pritzker administration also invested $30.3 million in the “Middle of Everything” tourism campaign this year.

“Our industry is really dependent on leisure travel right now. It’s a bit of pent-up demand from families deciding where to go on vacation,” Jacobson said Tuesday. “I think our state’s ability to play on a equal footing with every other state in the country, marketing the same, plays a huge role.”

Still, Jacobson said a strong summer for hotel owners won’t make up for the economic damage from the pandemic. He says there is still a long way to go before hotels find profitability and are able to pay old bills. State lawmakers passed a $75 million relief package for hotels this year, but that money has yet to be disbursed. Jacobson noted that hotel owners are extremely grateful for the four rounds of relief funding passed by the General Assembly.

“It helps when we talk to our banks and try to avoid things like foreclosure,” Jacobson said. “This has been a huge help, especially since the federal government has not provided a dedicated source of relief for hotel owners in the same way it has for other industries in hospitality like airlines and restaurants.”

Jacobson pointed out that financial assistance from Illinois leaders has become a lifeline for many hotel owners struggling to get by during the peak of the pandemic. However, he explained that hotels could face tough headwinds over the next few years with the possibility of a national recession, high gasoline prices and spikes in COVID-19 cases.

Surprisingly, Jacobson said inflation hasn’t challenged the industry’s recovery. Guests may notice room rates are higher than they were several years ago, even though occupancy rates have not fully recovered. Jacobson explained that wages have risen dramatically over the past three years, energy costs continue to soar, and hotel owners also have to pay property taxes.

“Really, the cost of every single thing that a guest consumes while they’re in a hotel has gone up dramatically over the past few months. So naturally the price of the room has gone up,” Jacobson added. “What we don’t ‘have not seen is that it plays a major role in consumer attitudes.

While it’s been a strong summer for travel, Jacobson said it’s been devastating to lose $5.4 billion in economic activity for hotels across the state since the pandemic began. He said the decline in hotel use was also costing more than $1 billion in state and local taxes.

Labor shortages are the biggest problem in the hospitality industry at all levels. Jacobson said a lot of people don’t understand the number of different jobs in hotels and lodging. There are many more jobs than reception or housekeeping, Jacobson added.

“Whatever your level of interest, whether in accounting, sales, customer service, or maintenance and engineering, we have a job for you around the clock,” Jacobson said. “Hotels never close, so there are jobs for single parents who need flexible working hours or students who need a job on the side.”

Jacobson would like to see Illinois lawmakers create more incentives for job seekers to start working in the hospitality industry. He pointed out that many jobs in small or large hotels can help create a path to the middle class for people.

“Sometimes we just need help with job training or working with local economic development agencies to connect those dots and make sure people realize the opportunities that are out there,” Jacobson said. “There is support out there and hopefully we can connect and help people looking for jobs while helping hotel owners find workers to join their team.”

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