Canceled weddings. Sheltering the homeless? How Sacramento hotels are coping with shutdown

The Embassy Suites in Old Sacramento, losing money as most of its rooms sit empty, is talking to its lenders about some sort of relief.

Managers of the Hilton Sacramento Arden West are trying to find other jobs for its 175 furloughed employees. The owner of a Hampton Inn closed the motel down and moved guests to his sister property, a Holiday Inn Express next door, where he’s rationing precious work hours among the housekeeping staff.

And the owner of a California Inn in Rancho Cordova is negotiating to lease the motel to Sacramento County officials to house the homeless.

Plenty of businesses have been devastated by the coronavirus pandemic and the “stay at home” order issued by Gov. Gavin Newsom. The hotel industry might be hurting as much as anyone.

With travel grinding to a halt, and weddings and conferences scrapped, hotel owners in the Sacramento area are struggling. Properties that had been 85 percent full are now dealing with occupancy rates as low as 6 percent, according to Visit Sacramento, the city’s convention and visitors bureau.

Hotels are reducing rates and relaxing cancellation policies to bring business in. But there aren’t a lot of discretionary travelers these days. At some hotels, the guests are almost all pilots and flight attendants whose airlines have contracts with the properties. Even that business has faltered as air carriers reduce service.

“We pick them up at the airport and bring them here,” said Sami Qureshi, general manager of the Hilton Sacramento Arden West. “That’s a lifeline for us at this point.”

In the four-county metro area, at least five hotels have closed completely, including the Kimpton Sawyer next to Golden 1 Center, the Hyatt Regency across from the Capitol and the hotels at Thunder Valley and Cache Creek casinos. Hundreds if not thousands of workers have lost their jobs in an industry that in happier times employs more than 10,000 workers in greater Sacramento.

“It’s the first time I’ve ever laid off anybody; it’s terrible,” said John Kehriotis, owner of the Embassy Suites in Old Sacramento.

Kehriotis, who is also a part-owner of the Sacramento Kings, said three-quarters of the riverfront hotel’s employees have been let go as occupancy plummeted.

Kerhriotis is a fairly typical hotel owner: He’s an individual. Although the major hotel brands are controlled by big corporations such as Hilton Hotels and Marriott International, more than 90 percent of the actual hotels are owned by franchisees.

So when revenue dwindles, owners like Kerhriotis begin feeling the pinch fairly quickly.

“We’re still running negative cash flow, like everyone else,” he said. “There’s no relief yet from the banks. We’re talking to them but so far no response. Everybody has a mortgage.”

The Embassy Suites lost $800,000 worth of weddings and conference bookings in March alone, he said. “That drives a lot of our occupancy,” he said.

Some assistance for employees

With restaurants in California not allowed to serve sit-down meals, innkeepers are providing sandwiches and other packaged meals to their guests. Lobbies have become ghostly quiet.

A few people sat in the lounge area sipping cans of soda Wednesday afternoon at the Sheraton Grand near the Convention Center. The lounge itself was closed, along with the hotel’s restaurants, and guests had to make do with pastry and coffee served in the lobby in the morning. Velvet ropes cut off access to the stairs leading to the ballrooms and conference areas.

At the Hilton Arden West, where occupancy has fallen to 25 percent, about 175 of the 200 employees have been furloughed.

They’re being paid fringe benefits but not salaries “to assist our team members as much as we can,” Qureshi said. He said the Hilton is also trying to connect them with Amazon.com, which operates a major warehouse and fulfillment center near the airport, and other employers that are hiring.

“Business is dismal, very tough,” Qureshi said.“It is a nightmare. We are working and planning and hoping things get better soon.”

Hoteliers are hanging their hopes on a quick turnaround, once the worst of the coronavirus pandemic is over and life begins returning to normal.

“I’m hopeful the business travel would ramp up pretty quickly because there would be a lot of pent-up demand,” said Mike Testa of Visit Sacramento.

As a vacation market, Sacramento could have an edge over some other cities once shutdown orders are lifted. Most of Sacramento’s visitors arrive by car instead of air, Testa said, “and I think you’ll see a lot of people traveling by car in the initial stages.”

But no one really knows when the market will reopen, despite President Donald Trump’s publicly stated desire to get the economy moving again by mid-April.

“That is the million-dollar question,” said Marc Sapoznik of Visit Rancho Cordova, the convention bureau in a suburb that depends heavily on corporate travel. “It’s all going to be tied to when we can see a level of containment with the virus.”

Creative solutions to empty rooms

In the meantime, hotel owners are getting creative. Amrik Singh, owner of the Hampton Inn on Auburn Boulevard, closed the motel down and transferred guests to the Holiday Inn Express he owns next door. About 20 employees at the Hampton were furloughed.

“There’s a reason why we closed the Hampton, there weren’t very many guests,” said his son Gagan Singh, who runs the Holiday Inn Express.

The consolidation helped boost occupancy to about 30 percent, making the 81-room Holiday Inn one of the busier properties in the area. Even so, the employees have seen their hours cut, particularly among the housekeeping staff.

“We’re trying to play at fair and give everyone a fair share of what hours are available,” Gagan Singh said. “We’re taking turns on who gets to come in that day.”

The 134-room California Inn & Suites in Rancho Cordova is negotiating with county officials on a lease to provide housing to the homeless, part of a statewide effort championed by Newsom to get homeless Californians off the streets as COVID-19 cases surge.

The county is attempting to line up 800 hotel rooms but hasn’t finalized any leases yet, said county spokeswoman Janna Haynes. She said the California Inn has been placed on the county’s list of “willing providers.”

“We want to contribute, in this pandemic, to the community,” said the motel’s manager, Nayem Armin.