From the desks of the Hotel News Now editorial staff:
- Lack of stimulus slowing consumer spending
- Tips on navigating CMBS distress
- Bank of England considers negative rates
- US hotel occupancy remains just short of 50%
- Unemployment claims remain mostly static
Lack of stimulus slowing consumer spending: U.S. retail sales declined in August, signaling that the end of expanded unemployment benefits is dragging down the broader economy, Reuters reports. Consumer spending makes up roughly two-thirds of the U.S. economy, and more than 29.6 million people are on unemployment.
Economists fear it could get substantially worse if Congress is unable to pass a new stimulus package soon.
“Consumers are being increasingly cautious with their spending,” Gregory Daco, chief U.S. economist at Oxford Economics in New York, told the news agency. “If Congress is unable to extend fiscal aid to households in the coming weeks, the economy will be particularly susceptible to a cutback in consumer spending, especially from the lowest-income families.”
Tips on navigating CMBS distress: Hotel owners looking for relief on their CMBS debt can’t approach special servicers expecting them to wave a wand and make their problems go away, reports HNN’s Stephanie Ricca from the recent Distressed Hotels Forum.
“A lot of people don’t know what they don’t know when they have to work with a special servicer,” said Tanya Little, CEO of Hart Advisors Group. “We help them understand they need a plan that’s more than just an ask. They need some understanding of what their future looks like. They need transparency. Can they put in more capital? It’s a two-way street. No one wants to lose money in these situations.”
Bank of England considers negative rates: An “unusually uncertain” outlook for the United Kingdom’s economy has left the Bank of England open to considering cutting lending rates into negative territory, as the country deals with dual threats from the coronavirus and Brexit, CNBC reports. The government’s furlough scheme ends next month, as well.
“The recent increases in COVID-19 cases in some parts of the world, including the United Kingdom, have the potential to weigh further on economic activity, albeit probably on a lesser scale than seen earlier in the year,” the Bank said in its summary.
The Bank’s Monetary Policy Committee voted to maintain the lending rate at 0.1% for the time being.
U.S. hotel occupancy remains just short of 50%: U.S. hoteliers saw occupancy of 48.5% for the week ending 12 September, down slightly from the Labor Day-boosted 49% seen the previous week and down 30.2% year over year, according to the latest data from HNN’s parent company STR.
Average daily rate for the week was down 25.5% year over year to $98.99, and revenue per available room was down 48.1% to $47.96.
Unemployment claims remain mostly static: New data from the U.S. Labor Department shows weekly initial jobless claims fell by 33,000 to a seasonally adjusted 860,000, which The Wall Street Journal reports is a sign that “layoffs remain historically high amid the pandemic despite summer hiring.”
Bradley Hardy, an economist at American University in Washington, D.C., told the newspaper that it’s hard to feel optimistic about those figures.
“If you have the flu season combined with a potential second wave, I’d be concerned about forecasting continued improvement in the job market,” he said.
Compiled by Sean McCracken.