Hospitality industry faces a bumpy recovery with labor, financial, Covid issues clouding outlook

Surveys indicate the Delaware hospitality industry is struggling with a labor shortage, rising wholesale prices, the impact of the Delta variant, and a lack of cash to pay the  rent.
The findings came from the Delaware Restaurant Association and Alignable, a business services company.
An August rent report from Alignable showed that restaurants nationwide are struggling to pay their rent while other industries have seen improvements. 
Delaware Alignable findings 
  • 71% of Delaware small businesses are concerned that the Delta variant will hurt their recovery, compared to 76% nationally.
  • 80% of Delaware small businesses in the restaurant industry are concerned about the Delta variant’s negative impact on their business. Nationally 88% of restaurant owners are concerned about the Delta variant.
  • 45% of Delaware restaurant owners said they couldn’t make rent in August. up from 33% in July. While the Delaware rental figure matched the national percentage, the rate of increase from July to August was higher than the national number.
  • 69% of restaurants survey in Delaware restaurants reported trouble in finding workers, a little lower than the national figure of 75%
  • Click here for a link to the national report.

Findings  shown below in the  Delaware Restaurant Association survey infographic

In addition to the findings of the Delaware survey, The National Restaurant Association released a national survey of customers to assess dining trends and consumer confidence amid the rise of the delta variant of the coronavirus.

The survey found that 6 in 10 adults changed their restaurant usage due to the delta variant, which is beginning to put pressure back on the restaurant industry.

Respondents report customers canceling existing plans to go out to a restaurant in recent weeks, or opting out of indoor dining in favor of restaurant takeout or delivery services.

“This is an industry that requires a ‘full house’ to make a profit, said  Leishman. “These changes indicate declining consumer confidence that will make it more difficult for restaurant owners to maintain their delicate financial stability as we enter a season fraught with the possibility of persistent Covid-19 challenges. Add in an exhausted workforce and rampant inflationary pressures…and the struggles this industry has faced for months will only continue, threatening more restaurants to permanently close their doors. Therefore, replenishing the RRF and prioritizing relief efforts and support of the restaurant workforce must remain a top priority for our local legislators and members of Congress.”

The federal Restaurant Revitalization Fund served as a lifeline for many restaurant owners. Still, an initial round of funding was quickly depleted – leaving roughly two-thirds of applicants nationwide approved but not processed for payment. Over $67 million in RRF grants were awarded to Delaware restaurant operators, representing only 37% of Delaware applicants. The rest remain in limbo, waiting to find out if Congress will act, Leishman stated.

Hotel update

While not included in the surveys, the Delaware hotel industry shares many of the issues of restaurants. 

“The Delaware hotel industry continues with a steady but slow recovery. Strength in leisure travel has generated significant business for Sussex County hotels. Still, lack of business meeting travel has slowed the recovery for Kent and New Castle Counties,” said William Sullivan, managing director of the Courtyard by Marriott Newark-University of Delaware. 
The American Hotel & Lodging Association reported this week that 67% of business travelers plan to limit trips, due to Covid-19 concerns.

Revitalization Fund proceeds did not make their way into other areas of the hospitality industry.

“Just as the industry sensed an uptick in business travel, the new impacts of the Covid-19 variants have slowed and discouraged travel plans for the fall, Sullivan said. “The hotel industry did not have the targeted American Rescue Plan Act that established a $28.6 billion “Restaurant Revitalization Fund”  so hotels continue to struggle with paying overdue loan payments. Requests to the federal government have been ignored. The hotel industry also is struggling with labor shortages, supply chain disruptions, and rising food prices.”

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