LAS VEGAS — The devastating effects of COVID-19 on the airline, hotel and restaurant industries have been all over the media, but the virus has also wreaked havoc on the businesses that service and support these industries.
PureStar, a provider of outsourced laundry and linen services to the hospitality industry with over 1,000 hospitality partners across 31 facilities in North America, is one of these businesses.
The business was processing volume for more than 200,000 rooms a day before COVID-19 hit, and in the few weeks after many states shut down non-essential business, hotels, casinos, and restaurants, our monthly volume plummeted to just over 7,000 rooms.
Like many businesses, though, our priority was and still is the safety of our employees and customers. Our vice president of Environmental, Health and Safety, Mike Altendorf, was very busy during March and April securing masks, gloves and protective eyewear, increasing our cleaning and sanitizing efforts in our facilities and delivery trucks, and working with our engineers to create plastic barriers between employees on productions lines and in employee breakrooms.
Work Area Tracking Reports were created to track employee proximity to understand and notify any employee that worked in close proximity with someone infected with COVID-19.
We also educated our hotel partners on our laundry cleaning processes, explaining how our chemistry and heat from high water and dryer temperatures are effective at killing most bacteria and viruses. I am proud of how quickly everyone jumped in and created innovative solutions and processes to keep our employees and hotel partners safe.
The precipitous drop in volume in March and April forced us to adjust our operations quickly. We consolidated volume in facilities where we could, like in New England, Las Vegas, and central Florida, and all our facilities transitioned to single-shift operations.
Many of our facilities moved to operating only a few days a week simply because the volume didn’t warrant opening the plant every day, as it is expensive to open a plant, start-up the boilers and equipment and then shut it down after only two hours. Our customer service managers did a great job communicating with our hospitality partners on revised delivery schedules.
Nonetheless, the springtime was tough for everyone, especially in Hawaii, the Bahamas, Las Vegas, Chicago, and the Northeast where nearly everything was closed.
As summer approached and states began to loosen regulations on non-essential businesses and travel, volume began to creep back up. It was evident people wanted to leave their homes as drive-to markets like Las Vegas, Atlantic City, the Ozarks and Florida began to recover.
Timeshare properties in Orlando and Las Vegas saw the most improvement with volume around 70% of pre-COVID levels. Additionally, many hotels as they re-opened wanted everything in the room cleaned, so that helped volume levels.
As summer ended and kids went back to school volume subsided somewhat but held relatively steady through Thanksgiving. The spike in COVID-19 cases following Thanksgiving had an impact on nearly all our locations, and the peak crowds expected in Florida and Hawaii were just not there during Christmas and New Year’s.
The beginning of 2021 remains a struggle for the commercial laundry business. Early indications show that the first quarter of 2021 will be like volumes in December 2020; 13% of our customers have still not re-opened.
Many restaurants and bars also remain closed or are open at half capacity, keeping our food and beverage side of the business very slow. We are also experiencing lower-than-average laundry volume per room stay as hotels are limiting daily room cleaning unless requested by guests.
Despite these difficulties, our hotel customers are becoming more optimistic, especially with the news that with most of the population is expected to receive the COVID-19 vaccine by this summer.
In a recent survey conducted by TripAdvisor, in the first week of January, nearly 70% of hotel clickers on TripAdvisor were booking domestic trips, with the summer months proving to be the most popular months for domestic vacations.
Moreover, nearly half (47%) of all respondents globally say they are planning to travel internationally in 2021, with less than a third (30%) of travelers saying they don’t expect to travel internationally at all this year.
We feel the real unknown is how much and when will business travel return. To get a sense of impact and recovery times, previous demand shocks, namely the tech bubble, 9/11, SARS, and the Great Financial Crisis (GFC) were severe, but relatively short-lived with demand returning to pre-shock levels within six to 12 months, according to CBRE Hotels Research and STR.
Many experts predict hotel occupancy related to business travel will take longer to recover following COVID-19, and we may not see pre-COVID-19 occupancy levels until 2023 or even beyond.
With that said, there have been some positive indicators for business travel. Several big box hotel partners like Marriott and Hilton are seeing conference booking pick up in the latter half of 2021. CES®, owned by the Consumer Technology Association and host of an annual tradeshow in Las Vegas with more than 170,000 attendees, says it plans to return in January 2022.
This announcement by CES® is great news for Las Vegas, and we are hopeful the booking of such conferences encourages other conferences and tradeshows to follow suit.
COVID-19 has also caused PureStar to evaluate its business strategy. We’ve turned our attention toward markets and locations that are anchored by leisure and outdoor activities and not so much by business travel. Florida and Texas, for example, have remained resilient, and we anticipate positive trends in these states.
Overall, we remain optimistic and continue to make investments to grow and improve our business. In November we acquired a new facility in Portland and now have our first footprint in the Pacific Northwest. We expect that Nashville, a new market we entered last year, will be a growth area.
In Las Vegas, home to our corporate headquarters and our largest customer base, we invested in new finishing equipment to improve quality and in water-saving technologies in our two largest plants.
It will continue to be a bumpy ride for all businesses who support the travel and hospitality industries, but at the end of the day, we believe the steps we have taken and will continue to take will make us prosper.
As I like to remind my team, there will always be laundry to be cleaned.