Niagara Falls' tourism-driven economy won't work if there are no tourists.
Hotel owners say they can almost count their guests on their fingers these days. Many workers have been furloughed in the ripple effect from the Covid-19 pandemic, and the 2020 tourism season already may be a lost cause.
"The occupancy for the foreseeable future is not good. Basically, 2020 is looking more and more as a season to write off," said Nirel Patel, president of Rupal Hospitality, which owns the Courtyard by Marriott at 900 Buffalo Ave.
"It's been devastating to the industry and the city," said Faisal Merani, who owns three Niagara Falls hotels. "We're a seasonal location at the end of the day, so when you write off a summertime, you're writing off a whole year, basically."
All of the hotels that have opened in Niagara Falls in the past decade received some form of government incentives. In many cases, those packages included reduced property taxes, but the hotels were still required to make payments in lieu of taxes, or PILOTs.
The attorney for the Niagara County Industrial Development Agency said there's a good possibility that 10 or 12 hotels won't be able to make those PILOT payments when school tax bills are issued in September.
"I've been contacted twice in the last five days by representatives of certain hotels," attorney Mark J. Gabriele told the NCIDA board during a telemeeting Wednesday. "Their occupancy rates are, I would say abysmal, but abysmal would be if they have more than one. Most of them are basically without occupancy."
The hotels with PILOTs also promised to maintain certain levels of employment, but now they've laid off or furloughed hundreds of workers because the employees simply aren't needed.
Missed payments or insufficient employment both can be reasons to cancel incentives, Gabriele said. However, he recommended that the NCIDA board avoid that step in the current circumstances. The board may have to grapple with that issue later this year.
Canceled incentives would force the hotels onto the tax rolls at full value, costing each tens of thousands of dollars in taxes at a time when revenues are at a historic low point.
"Drive around the city and get a bird's eye view of the fact that there is no occupancy," Patel said. "Basically every hotel is sitting at single-digit occupancy at best."
Merani is in better shape than most. Nearly half of his DoubleTree by Hilton, 401 Buffalo Ave., is filled with National Guard soldiers on deployment, although the government receives a deep discount on room rates.
"Other than that contract, we're basically down to 1% or 2% occupancy," Merani said. "This summer, even if things start slowly opening, we're expecting to do 10% or 15% of what we would normally do. And in the Falls, the summer is when you fill the coffers, so to speak, and it gets you to next summer. If you miss a summer, the whole year's kind of shot."
He owes PILOTs on the DoubleTree and the Niagara Riverside Resort, formerly the Four Points Sheraton at 7001 Buffalo Ave.
Patel said promised federal loans for small- to medium-sized businesses would help the hotel owners.
"If they were actually to come to fruition, we wouldn't have a problem making the obligations that we all have committed to," Patel said. "In the current financial situation that we're all in, it's very difficult to make those PILOT payments."
Patel and Merani both pointed to the federal government's much-delayed Paycheck Protection Program as a means of restoring jobs.
"Our primary goal right now, as soon as PPP funds are released, is to be able to bring employment back. However, when you bring your employment back, you still have to have something for these individuals to do," Patel said.