The 2020 economy has endured many blows since the Covid-19 pandemic and business shutdown/slowdown since March of this year. Hotels, Apartment Management Companies and Airlines have been hit especially hard.
During an interview on a major cable news network on September 23, the CEO of American Airlines Doug Parker said that potentially 100K airline industry workers could lose their jobs (19,000 at American alone) if $28 Billion of federal aid isn’t granted by the October 1, 2020 deadline. Sarah Nelson, president of the Association of Flight Attendants, appeared with Parker, said that business travel alone has been reduced by 96% this year.
The ripple effect is enormous to the U.S. and Global economies – including the corporate housing industry, which has been struggling mightily due to the business travel slowdown; many of them ceasing to provide temporary corporate housing to business travelers, and even closing their doors completely.
What is behind so many corporate housing company collapses? Let’s start with the high unemployment rate since March. Now that the CARES Act has expired, those who have not yet found employment are not paying their rents. According to the National Multifamily Housing Council, which represents the trillion-dollar Apartment industry:
“The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 86.2 percent of apartment households made a full or partial rent payment by September 13 in its survey of 11.4 million units of professionally managed apartment units across the country. This is a 2.4-percentage point, or 279,457-household decrease from the share who paid rent through September 13, 2019 and compares to 86.9 percent that had paid by August 13, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.”
That may not sound like a big deal – after all, 82% is a pretty hefty majority; however, it represents a shocking decline in revenue for apartment management companies throughout the country. There are now renters who cannot pay their lease terms, and to date, are protected from eviction under the CARES Act extension on eviction moratoriums.
Meanwhile, apartment communities all over the country have made apartment availability either very scarce to Corporate Housing Providers, or they have ended their Corporate Housing Programs all together. That has put an enormous economic strain on many companies that provide accommodations for corporate, intern, government and military and business traveler groups – hence the cessation of temporary housing programs and temp living company closures.
Now, more than ever, it is imperative for companies to make sure their preferred Corporate Housing Providers are not defaulting on their own payments to their Service Providers or other debtors.
One of Rental Relocation’s Corporate Housing competitors, Oakwood, recently decided to get out of the Temp Living business altogether; other competitors have struggled mightily of late, unable to survive their own plunging credit rating. Bad credit in this current economy can be disastrous for any company. Sadly, with no end in sight for the end to the pandemic that negatively impacts continued Business Travel, more Corporate Housing Providers will be at risk in the upcoming months – and many will not survive.
Now, more than ever, companies Temporary Housing Management must perform in-depth due diligence, and make sure the providers they are considering are solvent with an excellent credit rating and are not in default of any of their payments.
Because of the deep relationships we have had with apartment management companies throughout the country, and our history of on-time payments to our Service Partners, Rental Relocation remains a very active and prosperous housing provider with an impeccable credit rating. Additionally, RRI remains debt-free as it has been throughout our 31-year history in the Corporate Housing industry.
Rental Relocation has survived every economic challenge we have previously faced within these three decades of incorporation, and we will be able to continue to provide excellent accommodations whenever or wherever our clients need it.
If you would like to learn more about Rental Relocation’s Temp Living services, please call us toll-free at 1-844-737-0611 or email us at firstname.lastname@example.org to speak to one of our experienced Corporate Housing Consultants.
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