5 things to know: 15 October 2020
5 things to know: 15 October 2020
15 OCTOBER 2020 9:41 AM

From the desks of the Hotel News Now editorial staff:

  • US producer prices increase in September
  • Domestic air travel picks up as COVID-19 cases rise
  • Hoteliers worry as Spain ends travel program for seniors
  • US jobless claims totaled nearly 900,000 last week
  • US, Canada weekly hotel performance

U.S. producer prices increase in September: Reuters reports September U.S. producer prices increased more than anticipated “amid a surge in the cost of hotel and motel accommodation, leading to the first year-on-year gain since March.”

According to a report from the Labor Department on Wednesday, the price of iron and steel scrap also increased, though it did not change the outlook that overall inflation was cooling. It does indicate that fears of deflation were misplaced, the news outlet writes. A decline in the general price level is harmful during an economic downturn “as consumers and businesses may delay purchases in anticipation of lower prices.”

“The prices of some producer prices are climbing, but factories are not back to normal yet,” Chris Rupkey, chief economist at MUFG in New York, told Reuters. “Fed officials will remain cautious on the inflation outlook until producer price pressures heat up further.”

Domestic air travel picks up as COVID-19 cases rise: COVID-19 cases are rising in the U.S. at the same pace as during the July 4th weekend, just before the summer surge, and public health officials fear the nation will see a third spike as winter approaches, Forbes reports.

At the same time, domestic air travel has shown an uptick. The TSA screened more than 900,000 passengers over Labor Day weekend.

“The TSA has already hit that milestone on four days in October, and the month isn’t even half over,” Forbes reports. “For Americans trying to figure out whether it’s safe to take an upcoming business or leisure trip during the latest surge, several excellent tools can help make sense of the trends.”

Hoteliers worry as Spain officials end seniors’ travel program: The Spanish government has decided to end a popular program that subsidizes travel and hotel stays for “any resident in Spain over the age of 65, pensioned widows over 55, or persons aged 60 or older who receive a government disability or early retirement pension” during the low-demand season. Sources told HNN contributor Benjamin Jones the suspension of this program is causing more pain for the hospitality industry.

“This is going to have a tremendously negative effect on the sector as some 350 hotels participate in the program,” said Ramón Estalella, secretary general of the Spanish Confederation of Hotels & Tourist Accommodation (CEHAT).

As a result of the program ending, roughly 12,000 jobs could be lost.

“Besides the hotels closing, all these workers won’t be paying into the social security system, and then there are the taxes not being paid by the impacted businesses, so the government will also suffer,” Estalella said. “And it’s not just the hotels that will be hit but the entire tourism business, which the program’s guests use: restaurants, tour operators, bus companies, local attractions.”

U.S. jobless claims totaled nearly 900,000 last week: According to the latest jobless claim numbers from The Labor Department on Thursday, a total of 886,000 Americans filed for unemployment benefits last week, The New York Times reports. Adjusted for seasonal variation, the total was 898,000.

This marks an increase of roughly 77,000 from the week before. The number of new jobless claims dropped toward the end of spring and early summer once COVID-19 restrictions eased, but since then, “new claims for state jobless benefits had been steadily totaling about 800,000 a week, far above the level in previous recessions,” according to the Times article.

“The numbers are extremely worrisome, in my opinion, and they point to a labor market that is struggling to make progress,” Gregory Daco, chief U.S. economist at Oxford Economics, told the news outlet.

U.S., Canada weekly hotel performance: Occupancy in the U.S. hotel industry hit 50% for the second time since the bottom of the pandemic, according to data from STR, parent company of Hotel News Now.

For the week ending 10 October, occupancy dipped 29.2% to 50%, average daily rate fell 25.9% to $97.67, and revenue per available room declined 47.5% to $48.85.

“While a handful of the highest occupancy markets were those in areas affected by natural disasters (i.e. California wildfires), Saturday produced the week’s highest occupancy (65.2%) and ADR (US$110.84), indicating that the leisure and weekend staycation demand seen during the summer may make appearances into the fall,” according to the news release.

During the same week, the Canadian hotel industry showed slightly lower performance from previous weeks, according to STR. Occupancy fell 32.2% to 54%, ADR dropped 27.9% to 115.03 Canadian dollars ($86.90) and RevPAR decreased 66.8% to CA$37.09 ($28.02).

Compiled by Dana Miller.

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