There seems to be some disagreement among epidemiologists about whether the latest surge in coronavirus cases and hospitalizations represents the first wave (Part B?) or a second wave. Regardless, the economic impact of more social distancing certainly feels like a second wave for restaurant and hotel owners.

The Hotel Association of New York City reported that hotels there are operating at total reservation rates about 80% lower than the same period last year. That’s also not factoring in steep discounts the city’s hotel chains are offering.

Nationwide, the story is similar, with some analysts estimating hotel traffic will come in around 75% below 2019 numbers. Many hotel chains had quietly hoped that as COVID-19 cases seemed to ebb back in August and September, the worst was behind us. That consumers would respond to months of lockdown with an eager and robust fourth-quarter holiday travel season. 

Those hopes have effectively been dashed as the U.S. hit the grim milestone of over 150,000 daily confirmed cases and another all-time high in COVID-19 hospitalizations. 

In response, numerous states have implemented further travel restrictions, banned gatherings of more than six people, or banned any kind of meet-up with people from outside immediate households. Most of these restrictions extend past the Thanksgiving holiday weekend.

New York City has extended travel restrictions requiring those arriving in NYC to quarantine for 14 days or have two negative COVID-19 tests before engaging in public activities of any kind. Plus, masks are required in all public spaces.

The major hotel chains have already culled staff due to significantly lower 2020 revenues. They have cut administrative and marketing staff from corporate offices, and trimmed on-site staff, including cleaners. 

Industry analysts estimate that the U.S. hotel industry has shed nearly 200,000 total jobs over the past three months. That’s about 11% of the total number of people the sector normally employs.

Several publicly traded hotel chains, including Hilton and Marriott, have stocks still trading well below 2020 highs they set back in February. That’s even as all three major stock indexes (the Dow Jones Industrial Average, Nasdaq, and S&P 500) have hit all-time highs recently. 

That said, both Hilton and Marriott have recovered significantly from lows back in March/April, with each up over 80% since then. Both companies also used their third-quarter earnings reports and investor calls to warn shareholders that the fourth quarter would be challenging. This was on the heels of Pfizer’s announcement that a 95%-effective SARS-CoV-2 vaccine would be available before the end of the year. 

However, analysts noted that full-scale distribution of the vaccine would likely not relieve consumer travel restrictions until well into the first quarter of next year.

Plus, even after governments lift restrictions they’ve mandated , consumers will still need to feel safe and trust that it’s safe to travel and use hotels. Restoring consumer confidence may take some time, meaning 2021 could be a recovery year for the sector – but at a slower rate compared to the rest of the economy.

In short, the travel and hotel sector could be a good source of consumer bargains. But it may still be too soon for investors to see them as bargains… at least until we get a clearer sign that large numbers of people feel it’s safe enough to travel.