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Pandemic hammers Spokane hotel industry

UPDATED: Fri., July 31, 2020

Stephen Fochs, left, and his son, Spencer Fochs, examine historic photos and memorabilia on display inside the Historic Davenport Hotel on Thursday. The Fochs, from Redmond, Wash., were taking Spencer to school at Washington State University and decided to see the historic hotel in downtown Spokane.  (Jesse Tinsley/THE SPOKESMAN-REVIEW)
Stephen Fochs, left, and his son, Spencer Fochs, examine historic photos and memorabilia on display inside the Historic Davenport Hotel on Thursday. The Fochs, from Redmond, Wash., were taking Spencer to school at Washington State University and decided to see the historic hotel in downtown Spokane. (Jesse Tinsley/THE SPOKESMAN-REVIEW)

With coronavirus cases continuing to climb, one of the hardest hit industries in the Spokane region has begun to shed employees who are not needed for empty guest rooms, unused ballrooms and canceled events that are no longer bringing visitors to the Lilac City.

Walt Worthy announced this week that his five hotels, including the Historic Davenport Hotel, have laid off 115 permanent and 159 temporary employees as he faces a pandemic that has made very few people feel comfortable traveling and kept most vacationers in their own homes.

“It’s awful,” Worthy said. Wednesday night The Centennial by Davenport Hotels, at 303 W. North River Drive, “had 16 occupied rooms of 411. The night before last, we had less than $600 in food and beverage revenue. You try keeping a kitchen open with that. That’s what we are dealing with on a daily basis.”

DoubleTree by Hilton City Center also filed 90 layoffs of temporary employees with the Washington Employment Security Department, though DoubleTree general manager Neal Feldmeier said that figure is misleading.

“We are not permanently eliminating any jobs,” Feldmeier said.

He explained that the hotel put a large number of employees on furlough when the pandemic hit.

“We thought in 90 days, that they would be back,” he said. “But this impact has lasted longer than most people expected. So, we re-upped that (furlough) and notified our team members so they can apply for unemployment benefits. That’s really all we are doing right now.”

Doug Tweedy, regional economist for the state Employment Security Department, said the restaurant and hotel industry in the Spokane region has been one of the hardest hit by the economic downturn caused by the coronavirus pandemic. Spokane County had about 11,000 of those jobs before the pandemic, and about 6,000 people have been laid off.

The hotel and restaurant industry “continues to be one of the hardest hit sectors of our economy,” Tweedy said. “The virus is controlling everything from consumer fear to worker fear to employer fear.”

Grant Forsyth, the chief economist at Avista, said the local dynamic leading to the layoffs in the hotel and restaurant industry won’t change until the pandemic threat ends.

“The only way people are going to feel comfortable again, and have confidence in going back and participating in locations where they have to mingle with a lot of people, is a vaccine,” Forsyth said. “The problem with that is, you don’t just whip up a vaccine.

“This is why it’s so important to help mitigate some of these negative impacts,” he continued. “We need Congress to speak with one voice and provide, as much as they can, some support so you don’t return to mass layoffs.”

The federal Coronavirus Aid, Relief, and Economic Security, or CARES, Act provided unemployment for self-employed contractors and part-time workers who had not been previously eligible for unemployment benefits from the state of Washington.

While those two programs will continue until late December, the additional $600 weekly Federal Pandemic Unemployment Compensation ends today.

“Historically, labor has been that cost of operation that tends to get hit the fastest when you have a recessionary event,” Forsyth said. “To some extent, what Congress passed initially helped absorb these problems. But if they can’t reauthorize some of this stuff again, businesses may have to make more permanent layoffs.”

Worthy said he received between $2 and $3 million from the Small Business Administration’s Payroll Protection Program. After fearing he may have to give the money back because of the initial eight-week deadline to use the funds, Worthy has been able to tap those funds to keep about 350 people employed.

But he once employed scores of valet drivers just to park cars.

“Now nobody wants you in their cars. It’s down 98 percent. Worse than that is the banquet area of the hotel,” he said. “I don’t know how many tens of millions we spent putting together the nicest facilities in town. We have half-a-million (dollars) worth of lights in the ceiling. We haven’t had one event since March 16.”

Most of the servers he hired to handle events were laid off long ago.

“So, it’s kind of a scary time for the hotel business,” he said. “We are trying to let our people know everything we know. It’s not a fun situation for them or us. I understand what they are going through. A lot of people we had to furlough have been with us from day one. They are like family. It’s horrible.”

Feldmeier, of DoubleTree, said Hilton is publicly traded and was not eligible to receive PPP grants. His operation, which had about 200 employees prior to the pandemic, relies on conventions and events that come to Spokane every year.

“We ended up putting a large number of those employees on temporary furlough,” he said. “We brought back 40 to 50 people because our occupancy has come up.”

He explained that Hilton did a promotion offering front-line health care workers 1 million nights across the system.

“So, we’ve been a lot busier than a lot of hotels,” he said. “So far, we’ve been fortunate. We haven’t brought anybody back that we had to turn around.”

Just as Gov. Jay Inslee authorized Spokane County to move to Phase 2 of the stay-at-home order, Worthy brought four of his five hotels back on line. Like the business at DoubleTree, occupancy rates started to pick up a little bit in early June. But they’ve recently tanked.

“We spent all afternoon (Wednesday) discussing that very subject: What’s going to happen? How do you predict that?” he asked. “The cheapest thing to do is close all of (the hotels) down for six months. We don’t want to do that. But we have to react to how much business we are able to generate.”

His staff has kept flowers alive and the air conditioning going, which leads to utility bills that continue even if people don’t come to the hotels, he said.

“People have to feel comfortable traveling. We are already doing all the business there is to do in Spokane,” Worthy said. “Until you get this situation under control, it’s going to be difficult for a lot of businesses.”

Forsyth, the economist, agreed.

“My expectation is that it’s going to be a very slow recovery process,” he said. “Even if you allow your economy to be open, from a regulatory point of view, the reality with the surge of the virus is that a lot of people are still going to choose not to participate in activities that require social interaction.”

Even if a vaccine is found, it will take the government months to get enough doses and to distribute them to everybody, he said.

“It really is pretty frustrating,” Forsyth said. “We are just sort of creeping along here. There is nothing on the horizon that would potentially change that except, ultimately, a vaccine.”

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