CHANTILLY, VA – Back in May 2020, HX: The News asked Vinay Patel, CEO of Fairbrook Hotels, Chantilly, Va., for an honest assessment of the health of his business. Patel did not flinch. “I’m excited today at 20% occupancy,” he said eight months ago.
At the end of January 2021, Patel agreed to chat with HX: The News once again, offering up a dose of realism with a trace of optimism. “Occupancy is slowly coming back, but I think rates are the challenge,” said Patel, who also serves as vice chair of the Asian American Hotel Owners Association (AAHOA). “Where we typically would have charged $200 or $150 at a given hotel, now we’re charging $80 to $90.”
HX: The News: How are you doing?
Vinay Patel, CEO of Fairbrook Hotels, Chantilly, Va., and vice chair, Asian American Hotel Owners Association: After this grueling year—we’re hanging in there. I’m smiling and laughing and doing what I have to do.
HX: The News: In January 2021, what are your occupancy rates?
Patel: It depends on which hotel, but I would average it out at about 45 to 50 percent. Back in May, 20 percent was great but as leaders we’re always looking ahead. We’re always looking at what’s going to happen six months to a year down the road.
HX: The News: What were your predictions back then about the length of this pandemic?
Patel: We thought, ‘We’re going to be out of this pandemic hopefully by the summer, and it will be a short-term thing.’ By the fall we thought we would be back to normal.
HX: The News: Fast forward to January 2021—what’s the situation?
Patel: We’re nowhere near where we need to be. Now we know that this is going to be a long-term haul.
HX: The News: What’s the biggest challenge right now?
Patel: Occupancy is slowly coming back, but I think rates are the challenge. When we typically would have charged $200 or $150 at a given hotel, now we’re charging $80 to $90. Rates are where the pricing power for all hotels has really crumbled—and that takes a long time to come back. Occupancy may come back quicker, but that rate, and the ability to charge more, is gone for at least the near short-term. That’s the biggest challenge for us looking ahead.
HX: The News: How has it been from an operations point of view?
Patel: For the last nine months, we’ve been band-aiding things. Every time something happens, you put a seal here, you put a seal there. You still have to meet payroll, pay utilities, and yet the revenue numbers are much lower. It’s a different dynamic compared to May. Occupancy is definitely better, no doubt about it. But we’ve been taking a hit for the last 10 months. The banks have given us breaks over the last nine months. PPP helped out. Some of the small business loans helped out, but we’re still in that abyss and we’re at the lowest moments in the hospitality industry.
HX: The News: How has it been during these past few months that are already typically slow?
Patel: Usually November, December, and January are your slowest months, but you’re able to survive because you’ve had revenue over the summer and fall months. You’ve already budgeted to be underwater for November, December, and January. In this case, we’ve been underwater since May or April. We’re really struggling. It’s just one of those things where you’re kind of at the bottom of the bottom—but I think this is the bottom. I feel like in the next 30 to 60 days we’re going to stay at the bottom, and slowly we’ll start creeping back out.
HX: The News: If we call you back in January 2022, what do you hope for yourself and the industry?
Patel: It’s definitely going to be better. As an industry, I think we’ve learned a lot over the last 10 months.
HX: The News: What have you learned?
Patel: That we’re able to do a lot more with a lot less. I was looking at my year-end P&Ls, and we’re down in revenue by almost 60 percent. I’m thinking; That’s a catastrophe. But we’re surviving, we’re hanging in there even though we’re band-aid-ing everything. When I look back at January 2021 in January 2022, I think those efficiencies that we learned in 2020 would have really helped out. Revenue is going to increase. I mean, don’t get me wrong, 2020 was the worst year on record—officially. I was reading an article yesterday that declared 2020 as the worst year in hospitality history. I think if we were able to create those efficiencies in 2020, we can apply those same efficiencies in 2021, but with that increase in revenue. So we’ll be fine in that sense. It’s been an expensive learning lesson, but we’ve learned a lot.
HX: The News: Do you think things like enhanced cleaning and no more breakfast bars will continue?
Patel: I think the cleaning standards will continue. I think it’s one of those things that is here to stay for a while. I don’t think it’s going to go away. One of the main reasons is that I think we are all creatures of habit. You get used to it and then it’s hard to take that habit away. We’re gotten used to doing things the way we’re doing them, whether it be cleaning or using hand sanitizers. Breakfast I don’t think will go away. It will still be there in some way, shape, or form. Obviously, it will be in a different environment. It’s just going to be a while before we get back to what we’ve been doing before.