Homeless COVID-19 patients could save California’s hotel owners

The effort, termed Project Room Key, will be largely funded by FEMA, which has pledged to cover 75% of the costs, Gov Gavin Newsom said

Gavin Newsom (Credit: Emma McIntyre/Getty Images)
Gavin Newsom (Credit: Emma McIntyre/Getty Images)

There’s sweet relief coming for battered hotel owners just hoping to survive the pandemic.

California will book thousands of hotel rooms to house homeless people impacted by Covid-19, Gov. Gavin Newsom announced Friday.

The effort, termed Project Room Key, will be largely funded by FEMA, which has pledged to cover 75 percent of the costs, Newsom said.

Newsom’s team has secured 7,000 rooms and is on its way to obtaining a total of 15,000 rooms. Nearly 900 people have already moved into the hotels, Newsom said. The rooms will largely be set aside for homeless people who have been either exposed to the virus or deemed “high risk.”

It couldn’t come soon enough for the hotel industry.

Thousands of hotel workers in California have been laid off since mid-March when Newsom partially suspended the state’s WARN law, which normally forces employers to give workers 60 days notice before carrying out layoffs of 50 or more employees. In all, about 125,000 hotel workers in the state are expected to lose their jobs.

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Because of travel restrictions, occupancy rates have crashed to single-digit figures across the country, and major hotel firms are hemorrhaging money like never seen before.

Ashford Hospitality, which owns the Beverly Hills Marriott, is mulling bankruptcy, for example. Other companies like Hyatt have seen their valuations chopped in half.

“In my lifetime I have never seen damage as swift to the industry, plus with such an unknown end,” Peter Hillan, spokesman for the California Hotel and Lodging Association, told The Real Deal this week.

With tourism and travel no longer an option, hotels across the country are relying on government agencies to fill up rooms and keep them afloat.

In Chicago, for example, the city is paying several hotels $175 a night per room to occupy 2,000 rooms.

Project Room Key is being administered at the county level, Newsom said in his address Friday afternoon. Last week, Los Angeles County and city officials used social media to rally hotel owners to join the effort. In a Twitter message, Los Angeles Mayor Eric Garcetti said the county was soliciting price quotes for blocks of rooms.

On Friday, Newsom reported that the state has 10,710 positive coronavirus cases. About 2,100 people are hospitalized, with 901 in intensive care units.