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How Hotel Chains Are Responding To Coronavirus Fears

Travelers around the world are honoring government restrictions and “social distancing” recommendations by cancelling long-booked trips — and hotel stays required for them.

Benzinga · 03/13/2020 17:26

Travelers around the world are honoring government restrictions and “social distancing” recommendations by cancelling long-booked trips — and hotel stays required for them.

Some hospitality chains are bracing for vacancies. Others are prepped for government takeover as states scramble to preempt hospital-bed shortages.

Here are some of their operational responses.

See Also: Coronavirus Live Updates: What's Going On In The US And Around The World

Practical Responses

MGM Resorts

MGM Resorts International (NYSE: MGM) was one of the first to confront the dangers of lodging travelers.

"We were informed that an individual from New York who was a guest at The Mirage and an attendee of the Women of Power Summit from March 5-8 has tested positive for coronavirus,” the company said in a statement. “Upon learning of the individual's symptoms, Mirage staff worked in coordination with the state health district to implement MGM Resorts' health and safety protocol.”

MGM restricted access to the room occupied by the infected traveler, notified guests and employees who had potentially contacted the victim, and directed affected employees to self-quarantine.

It also brought in professional cleaners to deep clean and sanitize individual rooms and implemented “enhanced cleaning procedures” in public areas. The latter measures included the placement of hand sanitizer stations in high-traffic areas and the frequent disinfection of touched surfaces.

Hilton, Marriott

Hilton Hotels Corporation (NYSE: HLT) instituted similar measures. It also waived all cancellation fees related to government travel restrictions through April 30 and paused the expiration of rewards points scheduled to expire before May 31.

Marriott International Inc (NASDAQ: MAR) took similar precautions and waived cancellation fees through March 31 for guests traveling to or from Italy and a range of countries in the Asia Pacific market. In some regions, including India, the company has begun to check the temperatures of incoming guests.

“We are encouraging all our hotels to implement temperature screening of guests and associates gaining access by trained personnel,” a spokesperson told India’s Economic Times. “They will utilize thermal scanners and/or infrared thermometers.”

Hyatt

Hyatt Hotels Corporation (NYSE: H) — which asked staff in one of its Indian locations to self-quarantine after discovering that a patient dined at the hotel restaurant — extended the benefits timelines of its Asia Pacific loyalty members to give them time to qualify for elite status in the following year.

The company is also extending awards expirations through 2021 instead of 2020 and waiving cancellation fees for travelers in global infected zones. Wyndham Destinations Inc (NYSE: WYND) is taking similar steps to adjust its cancellation and benefits policies.

Financial Response

Hilton withdrew its initial 2020 guidance and determined to update its figures during its first-quarter earnings call.

"With the coronavirus now spreading beyond China and the Asia Pacific region, and the related increase in travel restrictions and cancellations around the world, we believe that the potential negative impact will be greater than our previous estimate and have decided to withdraw our previously announced guidance,” CEO Christopher Nassetta said in a press release.

Hyatt similarly withdrew its outlook and earnings sensitivity in anticipation of a decline in revenue per available room (RevPAR) in China.

"This is an evolving situation, and our ability to assess the financial impact of COVID-19 on our business continues to be limited due to quickly changing circumstances and uncertain consumer demand for travel,” CEO Mark S. Hoplamazian said in a statement. “...Over the past week, we have seen the outbreak spread beyond Greater China as well as temporary travel restrictions imposed by many companies, resulting in a decrease in near-term transient bookings and an increase in near-term group cancellations in North America and Europe that will impact our full-year outlook and earnings sensitivity.”

See Also: Regulators Aiming To Break Of Big Tech Are Receiving "Help" From COVID-19

Wyndham excluded the potential impact of COVID-19 from its initial 2020 outlook and has yet to update its projections. Same with Marriott.

"Given the fluid nature of the situation, we have not reflected the impact from the outbreak in our base case outlook for this year,” Marriott CEO Arne Sorenson said during the company’s fourth-quarter earnings call.

However, the company concedes that the impact could be “material” to full-year and first-quarter results.

“Assuming the current low occupancy rates in the Asia Pacific region continue, with no meaningful impact outside the region, Marriott estimates the company could earn roughly $25 million in lower fee revenue per month, compared to its 2020 base case outlook,” the earnings report read. “Room additions for the current year could also be delayed as a result of the Coronavirus outbreak.”

Despite the uncertainty, some in the industry remain confident.

"As a 100-year company that takes the long view, we are confident in our resilient business model, the performance of our leading brand portfolio, and our ability to respond appropriately to market conditions,” Hilton’s Nassetta said.