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Hospitality Businesses in Novi Share Struggles, Hear From Industry Expert

Hospitality Businesses in Novi Share Struggles, Hear From Industry Expert

(Crystal A. Proxmire, April 25, 2021)

Novi, MI – In a city with more than a dozen hotels and a major convention center, Novi Economic Development Director Mike McCreedy wanted to make sure that those in the hospitality business had access to the latest information and a chance to get together and talk about the challenges they’re facing. That’s why the City hosted Justin Winslow, President & CEO of the Michigan Restaurant & Lodging Association for a “Hope for Hospitality” Discussion on April 22 in the food court of 12 Oaks Mall.  McCreedy introduced Winslow to the room of socially distanced attendees, saying “Justin has been a fierce advocate for this industry.”

Winslow put into context the situation created by the COVID-19 pandemic, including the things that each business owner or manager in the room was already painfully aware of.

“Business travel, by and large, isn’t happening,” Winslow said.  “Hotels are a less than 50% occupancy… Conventions haven’t happened… Over 3,000 restaurants have closed for good.”

He noted that Michigan had the longest shutdown in the nation, with 159 days closed.  Restaurants are still capped at 50% capacity, and gatherings are limited to 25 people regardless of the venue size.  The state orders currently run through May 24, and a recent spike in cases leaves the future uncertain.

On top of the lack of revenue, staffing has been a significant challenge in both the restaurant and the hotel industries.  In addition to potential workers remaining on unemployment Winslow was concerned that potential employees might chose jobs that seem more stable.

“If you shut down this industry a third time and the workforce challenges that are so acute, so bad already, you will loose another 20-25% of people that won’t come back,” Winslow said.  “The uncertainly that surrounds the industry right now – will they be open, will they now, will they stay at 50% capacity, when can we go to 100% – are challenging hurdles to overcome when you are trying to recruit staff to come back.”

He explained the occupancy numbers might not ever recover, as many jobs are now being done remotely and there is less need for travel.  Staffing numbers may also change as things like check-ins and check-outs become more automated.

In restaurants, the shift to carryout driven businesses could have long term effects on staffing needs as well.  He noted that some restaurants have gone to completely takeout business, while others have started renting out their kitchens to “ghost restaurants” in the off-hours. Those are restaurants that only serve customers that order through online delivery services.

Among the attendees was Andrew Stylianou, owner of Big Tommy’s Parthenon.  His big concern, like many in the room, is how to find people to work.  He lost 17 employees from the shut-downs, but has been able to hire some back.  “It’s difficult to find good staff, but we’ve got a good support staff and a loyal following,” he said.  He’s been in business ten years, and his revenue is down by a third from pre-pandemic levels.

“We had to give up doing comedy shows, and that hurt us,” Stylianou said.  “And people miss them.”

In addition to the loyal staff and customers, Stylianou finds comfort in the City’s outreach.  “We have a great relationship with the city and they support us,” he said.

Tina Holmes has been with Holiday Inn Express for over 11 years.  Times changed, but she’s been out pounding the pavement to adapt.  “We used to have mostly automotive customers,” she said.  “Now we’re reaching out to old clients and keeping in touch with our regulars more.”

They also had already built a relationship with energy provider ITC, whose offices are adjacent to the hotel property.  “When the shutdown first happened, ITC rented the whole hotel for three months and kept their employees there in quarantine,” she said.  The company’s fear was that if someone contracted the coronavirus it might spread among the crew that’s responsible for maintaining electricity in the area.  “We closed to the public and I stayed there with them in quarantine those three months,” Holmes said.  The contract meant revenue that would not otherwise have come in early on in the pandemic.

Holiday Inn Express also started looking beyond their normal corporate automotive customers.  Holmes said they’ve worked hard to win with MDOT and other construction workers, as well as drivers for trucking companies.  “It’s been hard, but we’ve been working hard to adapt, and find new ways of doing things that will be good for us in the long run,” Holmes said.

Attendees were eager to hear about funding opportunities.

The biggest bright spot on the horizon is the $28 billion in Restaurant Revitalization Grants which will mainly help restaurants, but can also help hotels that offer dining and have more than a third of sales from that part of the business.  Winslow said that the money allocated is only about a fifth of the actual demand, and stressed the need for restaurants to apply as soon as the grant application process opens because the money is allocated on a first come, first served basis.

For the first 21 days, anyone can apply, but businesses owned by women, minorities, or veterans will have their applications processed first.  “Even if you don’t think you may qualify in those first 21 days, get your application in,” he said.  “Get them in quickly.”

He provided handouts from the National Restaurant Association that shared details of the grants including eligibility, how to apply, and what expenses are covered.

As businesses get funds, they have decisions to make about how to use them.  One idea brought up at the meeting was using funding to pay hiring and retention bonuses for employees, which several business owners have found success with.

Winslow added that moving forward the hospitality industry would have to do more to make positions attractive, and bonuses are one way.  He also said hotels and restaurants should look at ways to show employees that what starts as a rather basic job can one day become a career if there are opportunities for advancement.

Other sources of relief can come in the form of Payroll Protection Loans, administered through the Small Business Association of America, and local grants through counties and cities.

Winslow’s hope is that as Federal recovery money comes to municipalities, they will use some to help the businesses that have suffered most.  “If you want to have long term success for your city, how about making sure your tax base is still there and waiting on the other side of this pandemic, shoring up those industries that have been most hard hit so that they’re there and capable of paying those local taxes that make all of this process work?”

More information on Restaurant Recovery funds can be found at the National Restaurant Association website at www.RestaurantsAct.com.

More information:

City of Novi Economic Development

Michigan Restaurant & Lodging Association

Small Business Administration

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