The Charlotte Regional Business Alliance talks with Mohammad Jenatian from the Greater Charlotte Hospitality Alliance and Heath Dillard from the Charlotte Regional Visitors Authority about the current trends and potential future of the hospitality industry. These experts discuss hiring shortages, successful industry leaders, and vaccine and mask mandates.
The Charlotte Regional Business Alliance talks with Mohammad Jenatian from the Greater Charlotte Hospitality Alliance and Heath Dillard from the Charlotte Regional Visitors Authority about the current trends and potential future of the hospitality industry. These experts discuss hiring shortages, successful industry leaders, and vaccine and mask mandates.
Welcome to CLT Alliance Talks, a podcast on business topics, information and tools focused on building an economy for all in the Charlotte Region.
Dr. Adrienne Hua 0:12
Hi, everyone. My name is Dr. Adrienne Hua, and I am the new lead principal researcher here at the Charlotte Regional Business Alliance. I have recently graduated from Charlotte with a PhD in public policy. And I am looking forward to working with everyone at the Alliance along with our partners to better economic development in our region. So today, I want to introduce two special guests, Heath Dillard, the Director of Insights at the Charlotte Regional Visitors Authority, and Mohammad Jenatian, the President and CEO of the Greater Charlotte Hospitality and Tourism Alliance. So today, these two experts will be giving us a front row seat on how the Delta variant along with the continuing pandemic has been impacting their industry. I want to thank you both for joining us today, and to begin, Heath, why don't you give us some background into the topic?
Heath Dillard 0:59
Yeah, thank you, Adrienne, it's great to be with you. I know a lot of your listeners may not be familiar with or work in the industry. So I do sort of want to set the lay of the land and a bit of a foundation for them. And I think it's important to remind everyone that this tourism recession is still a recession of health and safety. It's a recovery. It's not like a typical financial or economic recovery, like those previous economic recessions where the growth was relatively steady, you know, the economy added back jobs, wages grew discretionary income started to flow back to families, and then that money might eventually be spent on travel activities. That's not the case here. And this recovery, we've actually seen Americans add to their savings at historic levels, we saw a lot of jobs that simply shifted to remote work total wages, and then the government benefits that we saw throughout 2020 and 2021, added up to greater income household income than than we would have seen without the pandemic throughout 2020. And in fact, we saw American household savings grow from about $4 to $6 trillion. And so all that said is Americans have the means, in aggregate, and we saw their will. And when we really saw this pent up demand to get back to travel in early 2021 is COVID cases began to decrease as more and more Americans became vaccinated. And we really saw the recovery surge and we actually saw some sectors almost immediately begin to look like pre-pandemic performance. And so here's where we are today. And here's how I see that this recovery a little bit different than than maybe the others that we've seen over the past several years. First is there's massive discrepancies in geographies. Across the United States, urban areas are continuing to suffer far more than other destination types. We've seen beaches, mountains, smaller metro areas and more rural destinations actually thrive over the last six months; many have actually seen record setting performance. However, urban areas are still down by more than 20% compared to that same time period in 2019. Additionally, the days of the week are almost in reverse, particularly for our market. In uptown Charlotte, hotels are barely selling half the same number of rooms that they sold over the same time in 2019 on weekdays. However, we're actually seeing 10% more rooms being sold on the weekends. And just to further illustrate that point, the entire Charlotte market had only seen 25,000 or more hotel rooms sold on a single night twice ever before COVID. And we've seen it four times since Memorial Day weekend alone. In fact, the Saturday night of Memorial Day weekend, we set a new record single day hotel room record with just over 26,000. And then most recently, with the Clemson Georgia matchup on Saturday night of Labor Day weekend, we almost sold 29,000 rooms on that Saturday night, a new single day record in Mecklenburg County. So that sort of leads me to my third point, the travel recovery is not this steady, linear growth. It's uneven across various travel sectors, our recovery so far has largely been driven by leisure. And then on the other hand, midweek is limited by the delay in corporate travel and the slow rebounding group. And so when we think about the health pandemic, we think about group, which are events that are by design used to bring large volumes of people together in a single space, those are going to suffer and they're going to continue to suffer for a little bit. But additionally, technology is now given the ability for people to work from anywhere. And they're allowing meeting and event planners to subsidize that in person attendance with virtual attendance. And so we may see slower growth, at least in the short term. And then lastly, we're still experiencing a labor shortage. And so in most recoveries, we're waiting for demand to come back and we have a bit of a slower time where we can ramp back up staffing to those appropriate levels where we can service that demand both supply and demand are growing relatively linearly, but the abrupt nature of the pandemic and the really quick rebound that we've seen is called massive supply chain disruptions across our economy. But none probably as important to our industry as our ability or inability in some cases to get our people back to work. As of today we're at about 90% of those pre-pandemic employment levels. Despite having 12% more hotel rooms available on a nightly basis, most weekend nights, you can find dining rooms and bars at full capacity. And most recently, we started to see events resume again, in our market, we're starting to see concerts, again, where we just launched the first week of our latest Broadway show, you're starting to see sporting events. And so what that show is, there's thousands and thousands of people showing up in our market. And the labor shortage limits that growth because you can't serve all the potential demand exists either because you can't get the rooms clean, or you can't serve all the tables, or your menus limited because of supply chain disruptions, etc. So capacity is limited in some ways, not by the demand side. But but actually by the supply side. In summary, we're in a much, much better place today than we were even six months ago. But this recovery is not going to be this nice steady growth, it's going to continue to have periods of really strong performance. And it's also going to continue to have areas that lag behind.
Dr. Adrienne Hua 6:04
Thank you he that was a great intro into our topic. So to begin our conversation, I would like to ask both of you this question. So given the rise in cases driven by the Delta variant, and you know, this renewed uncertainty over the rest of the year, how do you believe your industry is going to be affected? And I'd like to start with you, Mohammad.
Mohammad Jenatian 6:23
If we have learned anything from this pandemic, it's the fact that what happens to all businesses, particularly in our business, and what determines the success or failure, the businesses and people that have done well, others that have closed their bars and restaurants and many other businesses, it's all about leadership, people ask me about how's your industry doing? My answer is always been it depends on the leaders of any different business, whether if you're a restaurant, business, bar, business, and hotel business, and fortunately, with our industry, and the fact of the matter that most of the people in our business are entrepreneurs, which means you better be creative. But more importantly, for a lot of them, their attitude has been failure is not an option for me. And when you have had that kind of attitude that you know, you cannot fail, you cannot sit around and whine about pandemic or other issues and everything else, it forces you to do what you need to do in order to make sure that not only you continue to survive, but as Heath said, many of our businesses in hotel business and you know, obviously restaurant and bar business, some of them actually have been thriving in the past couple of years. And a part of it has been and you know, and I describe the difference between them being managers or leaders, and I believe managers solve problems, leaders transform problems into opportunities. Many of the people in our business, you know, basically they have been creative enough that failure has not been an option. They basically know changes. And uncertainty is a part of life. And yes, we're dealing with a pandemic that's different than anything else. But we have dealt with so many other things that what gives me hope more than anything else having been in our industry in Charlotte after 2001 and after 2008. The following years, we actually had some of our best years ever. And a lot of people may not know that pre pandemic, our industry had an impact of $7.6 billion in the Charlotte area. And it has grown. And this we're talking about an industry that over 20 years ago was not even generating a half a billion dollars in economic impact. We have come a long way. And a lot of what we've done and for some of us that have been around are going back and learning from our past experiences with the 9/11 and with the economic meltdown and realizing that okay, now we got to step up and it's all about leadership. What do we need to do a to deal with a pandemic? And I don't mind saying that we as business people, we need to lead, we need to realize that this pandemic is something that I don't believe it's going to go away, we all need to learn. And that's a fact that we need to get our hands around that that, we need to live with this pandemic, and how do we live with that the personal habits that need to be changed? I you know, I was talking to one of our group meetings and let's face it, the bottom line of it is when you look at what are the businesses in our industry, I remember when the pandemic started, everybody said it will take years for people to feel comfortable to get into a plane and travel. Well, thanks to the leadership of the airlines to the leadership of the airport and the leadership of FAA. They stepped up and they put some rules in place and also hotel chains did the same thing. They put protocols in place and our industry was one of the ones that from day one. And airlines are a perfect example. And I'll say this to anybody that think that masks don't work, but guess what we're all of us that thought they would take years for people to get into an airplane, I was somebody tell me when is the last time you got on the plane, and you had an empty seat. And the thing was that between FAA and the airlines, they established some rules and the rules where masks work. And we don't want to argue we don't have enough room over here, you want to get on a plane, we don't care about your political beliefs. We don't care about your religious beliefs. We don't care about your health condition, you want to get on a plane, you need to put your mask on. And of course, we also have to think about for those that argue with that, why is it that nurses and doctors, people in health care for years and years, they're wearing a mask, there's a reason for it. And I think once we learned stuff like that, and obviously we all know, like Heath said, when people started getting vaccinated, and I don't think this vaccination is any different than you know, everybody soon is gonna go get a flu vaccine. And the bottom line of it is we have to step up. And we have to realize that the only way we can control this situation is for our for everybody, particularly for our leaders, and particularly for private business to step up as a lot of people have done. As we all know, there are a lot of restaurants, hotels have done that from day one, from day one, when people said, nobody's going to travel. That's why destinations, like the beaches and the mountains, and I've traveled a lot. Travel as a whole is actually thriving in this country. It's for communities like ours, and even in our community. It's basically a lot of downtown hotels, or people that have put all their eggs in the basket of corporate business and conventions and conferences that have been suffering. Otherwise, everybody has been doing well. But I think the bottom line of it is for everybody in our community to say you know what, it maybe it's not a good thing to give people choices, especially when people's choices impact the livelihoods and lives of so many other people. And I think until we get our hands around that and stop having a referendum on what works and what doesn't work, we're gonna have to deal with it. But then again, it's life, as I mentioned to you earlier, that it's another challenge that we all have to deal with. And the ones that are creative enough, the ones that know that they want to be successful. This is one of the opportunities that's out there for everybody.
Dr. Adrienne Hua 12:27
See, that's a great point of view, Mohammad. What about you Heath? Do you have any input on this topic?
Heath Dillard 12:32
I mean, I think, I think Mohammad, you know, nailed it. I mean, the industry that we're in is a people-focused industry, right. And that hasn't changed, whether we're dealing with COVID, or financial recession or anything else. And so, you know, whether the challenge is labor shortage, or trying to find the talented people to serve your customers that we were experiencing that pre COVID, right. I mean, we were, as Mohammad said, coming out of the financial recession, we had the 10 strongest years of growth Charlotte and ever experienced. People were, you know, businesses were struggling to find workers then. And so we were already getting creative. And now we're a year and a half into this. And I think, you know, the Delta variant, it might frustrate some people. It might diminish some hope. But I believe most businesses that we talked to agree, right, this is just something we're going to live with for a while and it doesn't overshadow what our business is, which is a people focused business. We're either in the entertainment business, we're in the service business and and we've seen over the last 10 years or so that travel and hospitality is becoming a greater share of the American consumer wallet. And so we're seeing more people dine out in many ways than they did pre COVID than they were, you know, buying groceries in grocery stores. You know, they're traveling more, they're taking more trips per year, even if those are multiple small weekend trips. And so it's really becoming part of the culture and our businesses sort of understand that. And they're putting protocols and policies in place that still allow them to serve their guests and serve their customers in a way that also keep them safe and healthy. And whether that is you know, mandating masks in their business or thermal scanners, which we've introduced in some of our venues when we're talking about really large crowds of people, or a standardized third party sort of check of cleanliness and sanitization, which is a lot of the airlines and hotels is, as Mohammad mentioned. Our businesses have done the things that they have to do to ensure customer comfort and to create that perception of health and safety because it's really what's going to continue to move people forward. We saw very early on folks were very apprehensive about getting on an airline. But if you segment that out people who traveled early on once they traveled that first time and they experienced it and they saw other people in the airport wearing masks and they saw their fellow passengers wearing masks. The comfort level changed, quite dramatically, and they were much more likely to travel via airplane again. And so it really was about getting somebody to do that travel experience once and I was really happy to read our I think as our health director said, there's been no known cases come from the Clemson, Georgia matchup. You're talking about an event that had 75,000 people, reports of the stadium itself shaking with so many people. And I think that that's just phenomenal that we can host those kinds of really large strategic events that create a massive flow of cash from other areas into our local businesses, and that we can continue to do so in a healthy and safe way. And I think that's going to continue to be the focus going forward, I think how that happens, will continue to change because our industry is ever adaptive, but that will continue to be the focus and what people sort of latch on to is, how can we continue to serve? How can we continue to entertain? And how can we do it in a way that keeps people health healthy and safe?
Dr. Adrienne Hua 15:57
I think you guys bring up really great points. I mean, there's this level of optimism in the air, and you can most certainly see it in Charlotte, you know, still seeing people out at games. I mean, especially at the Panthers game the other day, I was walking through the streets, so many fans, so many happy people. And you know, they are doing the right thing. And I can see it and I can see that they're happy. And so it's really a great trajectory for our city right now. So now I know we don't have much time left. But I do want to end our podcast with this last question. How do you guys see the rest of this year playing out? And why don't we start with you, Heath.
Heath Dillard 16:28
One of the things that the Delta very definitely did was delayed returned to office for many large-office employers. And so we really see that as the impetus for the corporate travel recovery. And in a market like Charlotte has been largely dependent on that mid-week, corporate transient business. Conference and convention and group is important as well. But that corporate travel has been really a bedrock of our long term success. And so that's going to be delayed, it's probably going to cause a softer fourth quarter than maybe we would have forecasted, you know, three to six months ago. But I mean, we've had so much success on the weekends. I mean, we are routinely seeing Friday and Saturday night hotel performances of 22, 23, 24,000 rooms sold. And that's what no events, right you think about the kind of performance that we've saw a scene in Charlotte over the summer, a market that for the last five to 10 years has really been trying to come into its own as a leisure destination, we've been a market that's had to rely on events to really create that motivation, or that sense of urgency to travel to Charlotte. And for the last six months, we've seen people show up in droves and fill our hotels and fill our restaurants and fill our bars and Ubers and taxis and parking and all the other businesses that benefit without the benefit of events. And now you're getting ready to start concert, you're starting Broadway shows you're we've started the NFL season, soon you're going to start an NBA season and a hockey season. And all of those things are just going to continue to add. And so I think we're going to continue to see a really strong leisure recovery. And as that happens, you'll start to see corporate and group add on to that. And by the first quarter of 2022, I continue to think that we'll be in a much better situation for our industry than we are even today.
Dr. Adrienne Hua 18:11
That's great to hear, Heath. What about you, Mohammad?
Mohammad Jenatian 18:14
Well, you know, the number one thing that we need to look at as far as better future for our industry, and definitely for our economy. And the most important economic development catalysts for Charlotte has always been our airport, and our airline and for all of us to realize that our airport is actually thriving the busiest airport in the world. And it was the second busiest airport in the world back in June of this year. And it's still growing, the renovation and expansion is going on over there, which you know, once you see the future a little bit more, and you see the you know, the opportunities ahead and arrow, our airline American airline is thriving, that is something for all of us to look at. And as far as the rest of the businesses are concerned, again, going back for every one of them to know that you may not have that much control, especially with the change in economy as far as corporate travelers, but you need to go focus on staycations and vacations and reaching out to the power region to get business. And Heath said our biggest challenge right now is and the reason the revenues are not there is because of the fact that everybody is struggling to find labor. And one of the things that we need from our leaders. I know that our city is planning on spending a lot of money to help us recruit people and find people. Well, the problem is they're not lost. They're not there. And one of the things that we need to do to get them to realize that the reason they're not working is because of the issues such as transportation, childcare, and also earning limits, because a lot of people know they can get a job and everybody and definitely our industry is paying a lot more but are we putting the pressure on them that pushes them over that cliff that now they make a few more dollars. But now they cannot, you know, basically qualify for any childcare subsidies, or any housing subsidies and all of those. And those are the kind of stuff that we need to do. And I finally will tell you that we're also more focused on much like we did with the convention center is doing everything that we can to improve the overall infrastructure and definitely travel and tourism infrastructures. What we did, and it was an advantage that we took by renovating the convention center A: you got a lot of people that came to the city because they have to work over here. B: now we have a much better chance of securing that. So we're really are focused on what are some of the things that we need to do for everybody to know that you got to live with this, you as a business owner are responsible to do what you need to do before the government would mandate any more regulations on you. And I hope that everybody understands that if we don't, we're gonna have to deal with a lot more mandates. I think, you know, at the end of the day, knowing that we are lucky to be in Charlotte, North Carolina.
Unknown Speaker 21:06
Yes, that is a great way to end our topic, Mohammad. So gentlemen, I want to thank you for joining me today. That was great insight to talk about and I'm really grateful that you guys took the time out of your busy schedules to share your knowledge with us. We look forward to having you guys again for CLT Alliance Talks.
Learn more about the Charlotte Regional Business Alliance at Charlotteregion.com.