A bumper hospitality weekend expected for ‘sold out’ New Orleans, despite COVID rise | Business News

A bumper weekend was expected in a “sold out” New Orleans hospitality sector, as crowds flowed into the city to catch the fleur-de-lis drop at Jackson Square on New Year’s Eve, Saturday’s Allstate Sugar Bowl and a last gasp playoffs bid by the Saints against the Carolina Panthers in the Caesars Superdome on Sunday.

But as ever during these pandemic times, there are caveats attached, with record rates of new COVID-19 cases in Louisiana and a shortage of workers for hotels, restaurants and shops dampening the outlook for the New Year.

The hospitality sector kicks off 2022 with a surge of visitors following the Baylor University Bears and the University of Mississippi’s Rebels for the Sugar Bowl, as well as supporters of the NFL’s Panthers. Fans have swelled tourist numbers such that city is “sold out” for the first weekend of the year, said Kelly Schulz, spokesperson for New Orleans & Co., the city’s official tourism marketing agency.

“‘Sold out’ means that most of the 26,000 rooms in downtown and the French Quarter hotels are at 100% occupancy,” Schulz said. That is largely because this year’s Sugar Bowl is between “two high-profile teams from drivable markets in Texas and Mississippi,” she said.

But there was an ominous cloud looming in the coronavirus’ omicron variant: On two consecutive days this week, Louisiana reported its highest increase in COVID-19 cases since the pandemic began in March 2020. Gov. John Bel Edwards warned Thursday that people should wear masks in indoor public spaces and limit exposure outside of their homes, and suggested residents celebrate at home instead of at parties or large gatherings.

Schulz agreed that “safety comes first when it comes to omicron,” adding that “local residents, hospital employees and visitors should follow all safety guidelines in place.” But New Orleans & Co. isn’t advising people to stay away from the city.

Louisiana has one of the lowest vaccination rates in the country, with only about half the population inoculated. Mississippi is even worse, while Texas and North Carolina have vaccination rates only slightly above 50%. Almost all new reported cases are of the omicron strain, and most of those are among unvaccinated people.

It’s not yet clear what dampening effect the surge might have on a slowly recovering cruise trade, but the Centers for Disease Control and Prevention on Thursday urged people not to board cruise ships even if they are vaccinated. Both Norwegian Cruise Lines and Carnival Cruise Lines have ships scheduled to depart the Port of New Orleans on Sunday, with a total of as many as 5,000 passengers aboard.

The current precarious state of New Orleans’ hospitality industry suggests that the pattern seen in 2021 will continue well into 2022. While hotel occupancy is expected to be around 100% in New Orleans this weekend, the recovery sputtered along during 2021, with setbacks following periods of rebound. Hurricane Ida, ironically, boosted occupancy in the fall as people displaced by the Aug. 29 storm moved into hotel rooms that had been left vacant by canceled conventions and absent tourists.

“One factor that has set New Orleans apart from the rest of the country is the impact of hurricanes in the fall last year and this year,” said Chelsea McCready, senior director of hospitality market analytics at CoStar Group, parent of industry tracker STR. “Blocks of rooms for evacuees and first responders have had a positive impact on hotel occupancy … in part making up for the lower leisure and convention travel.”

Still, the city’s hotel business has moved in a generally positive direction. Occupancy and daily rates for rooms have all improved significantly over the course of the year. In January, occupancy was down from 2019 levels by 54%, but by November was down by only 10%, according to STR data.

Over the summer, leisure travel to New Orleans was back in line with historical levels. The gap in occupancy was due entirely to the slower recovery of conventions and conferences, which accounted for 3 in 10 rooms sold before the pandemic, McCready said.

“But the delta variant caused the recovery to falter again, even impacting leisure travel, which has remained below pre-pandemic levels since August,” she said. “As we kick off 2022, the omicron variant has jeopardized the recovery yet again.”

The conventions business in New Orleans will start 2022 with a comics convention, Fan Expo, next weekend. It is expected to be well attended. But few big business gatherings are booked early in the year, and nationally there are ominous signs amid cancellations by big companies at events such as the Consumer Electronics Show in Las Vegas.

The large New Orleans hotels, such as the Hyatt Regency, Sheraton, Marriott and Hilton New Orleans Riverside, have all seen a modest uptick in conventions and other gatherings into the new year. But none is expecting a return to pre-pandemic levels anytime soon.

David Piscola, general manager at the Hilton Riverside, said the New Year’s Eve weekend was completely full – “oversold” for some hotels like his – but that is expected to taper off quickly.

“January was projected to be a very soft month for Hilton New Orleans Riverside, and the city in general, even prior to the news of the latest variant,” Piscola said. “We have had some cancellations in the month but nothing severe.”

Looking ahead, he added: “We have not heard from any groups outside of January nor any inkling of future cancellations of major events, though it may be too early to determine omicron’s impact. Prior to this, I would estimate 2022 to be about 65-75% of a ‘normal’ year.”

Though better this year than in 2020, the revenue per available room for New Orleans’ hotels is still is down by 38% compared to the January-November period in 2019, STR data show. On top of that, there are about 15% fewer rooms available, as hotels either remain closed or have taken rooms off the market because of labor shortages.

Meanwhile, visitors during the busy weekend may find it harder to find a restaurant table. The chronic national labor shortages mean that those restaurants that have reopened are not back to their normal hours and are not accepting the same rate of customers as before.

The Desire Oyster Bar at the Royal Sonesta Hotel on Bourbon Street, for example, was turning away customers ahead of the weekend even though it was nowhere near full. “We just don’t have the staff, so we have to slow it down,” a receptionist explained.

Arnaud’s Restaurant and its French 75 bar were booked solid for the New Year’s Eve weekend but still planned to close all day Saturday and open for only truncated hours Friday and Sunday to give its exhausted staff a rest.

“We just made that decision because of staffing shortages and because the current staff have worked really hard and will be doing double shifts the days before,” reservations manager explained Jennifer Drury said.