As we exit the car wreck that was 1.5 year Covid pandemic, we are just now shaking off that generational shock. Nowhere is that more apparent than the hotel industry. As reported in USA Today earlier this year, it is projected California hotels Covid impact will not fully recover until 2024. Almost 500,000 hotel industry jobs were lost in this country alone.
Further segmenting the market, it is the luxury class properties which suffered most. In the middle of 2020 luxury level occupancy was just 15% compared to 40% for economy. This punch to the solar plex crippled the hospitality industry last year.
California Hotels Covid Impact
Fortunately, we are not stuck on timelines dictated by economists. The industry as a whole is bouncing back and if Las Vegas is an example the summer of 2020 will be a BOOMING bounce back.
As for the rest of the country (including California), Globestreet.com recently notes: hotel industry’s 2021 resurgence has been largely driven by leisure demand as lodging facilities that serve vacationers, weekend travelers and day trippers are performing very strongly and, in some cases, charging higher average daily rates and filling more rooms than prior to the pandemic. Anticipated demand will change during the second half of this year as post Labor Day corporate travel should increase, and with schools reopening leisure travel will slow down. Furthermore, the predicted death of urban centers is proving to be greatly exaggerated as the pendulum of outbound flight from 24/7 urban cores is swinging back. The availability of a vaccine has made city workers and dwellers less fearful of infection and anxiety to be in crowded environs.
The hospitality industry is reemerging with dramatic transformations that may permanently alter the sectors pre-pandemic business model and create higher margin businesses. Owners and operators are touting potential savings and increased efficiency from reduced hotel workforce labor and costs on services such as housekeeping, food, and beverage. Similar to the airline’s ala carte approach, the hotel industry is attempting to move guests toward an opt-in choice for various services, such as daily room cleaning.
A Call to Action in California – Challenge This Year’s Assessment!
The good news above is very encouraging, and recaps what my property tax firm’s California hotel clients have been conveying to us directly. The bad… The 2020 punch still lingers. You can’t blink away a very unfortunate year. On that note, my tax firm is gearing up to aggressively challenge these assessments this year.
As any California investor/business owner knows, the valuations underpinning your property’s recently issued tax bills are predicated on the valuation (financial state) as of January 1st lien date. This directly reflects the total 2020 financial year.
Of the myriad of challenges set before our hospitality industry clients, there is one thing that can be done quite easily to contribute to their bottom-line… Challenge the current 2021-22 California county property tax bills being issued this summer. It’s impossible to think of a scenario of a property not being impacted this past year and the “snap shot” of this year’s assessment being January 1, 2021.
Each property is different, so it is important to drill down to the details to present valuation relief for this year. If you wish to have a free analysis done of your property or portfolio, please contact us though our Covid Relief website: www.lowermypropertytax.info. Grant Lee Bradley and its analysts have won over 2000 commercial property tax appeals in California. We would love to put you and your team in direct contact with one of the states premier hospitality property tax professionals. We would love to hear from you!
Jay is a founding partner of the property tax firm of Grant Lee Bradley, Inc. For the past 20 years he has led his company to be one of the top property tax consulting groups in California, Nevada and Arizona. Grant Lee Bradley is an elite group of property tax consultants dedicated to effectively contesting and collecting overpaid property taxes.
His clients include QUALCOMM, Siemens, Merck, PerkinElmer, SeaWorld, Fujifilm, Solar Turbines, Panasonic, DuPont, BD, LabCorp, Dell, Lockheed Martin, AirGas and many other Fortune 1000 companies.