Some restaurants have started tacking a COVID-19 surcharge onto customers’ bills

Plus, the complications caused by Cal State's decision to go all-online this fall, mortgage delinquency figures are bad but not disastrous, and more.

May 14, 2020

Covering COVID-19 is a daily Poynter briefing of story ideas about the coronavirus for journalists, written by senior faculty Al Tompkins. Sign up here to have it delivered to your inbox every weekday morning.

This is not going to go well. Restaurants are starting to tack a surcharge on your bill because their costs have gone up. Rather than changing menu prices, some restaurants have just added the surcharge to the bottom of the bill, like a sales tax.

Fox 17 in West Michigan found a restaurant in Holland, Michigan, that added a dollar to a $12.50 tab and then charged sales tax on that total.

(Courtesy: Fox 17 West Michigan)

KY3 in Springfield, Missouri, followed up on customer complaints after restaurants tacked on a surcharge with the justification that meat and other prices have recently skyrocketed. The outcry on social media was so loud that at least one restaurant backed down. But the restaurants have also gotten a fair number of sympathetic social media posts.

Restaurants in San Diego tacked on COVID-19 surcharges, too.

Before we get too upset with restaurants, understand that lots of businesses add surcharges for COVID-19-related problems. International shippers, for example, add surcharges on freight. Air cargo handlers have added surcharges, too.

This whole surcharge thing is becoming a bit much, don’t you think? In the last year we have seen restaurants add “climate change” surcharges and “living wage” surcharges. In Washington, D.C., one upscale restaurant added a surcharge to pay for restaurant workers’ benefits. At some point, don’t routine expenses become part of the cost of business and not a fee added to a bill after you have ordered your meal?

 

One state, two university systems, two plans for fall classes (for now)

This is just how complicated this fall could be in America. Some universities may keep their plans to fully reopen in August while other nearby schools may take their classes online. Even if schools do plan to hold in-person classes, a resurgence of COVID-19 infections could still lead to state and local governments to order them closed, even mid-term. That is why what is playing out in California this week is of such interest to schools around the country.

The University of California system said despite California State University’s decision on Tuesday to go mostly “virtual” in the fall, the UC system, which generally has bigger schools and more students living on campus, is putting off a decision on whether to try to hold in-person classes. In a Q&A about the coronavirus on its website, the UC system said, “At this juncture, however, it is too soon to predict and evaluate the impacts of COVID-19, if any, on UC instruction beyond summer.”

Cal State is the nation’s largest four-year university system — another reason its decision is nationally noteworthy. Cal State’s more than two dozen schools attract many more commuter students than schools in the UC system, so a decision to not open dorms is less financially impactful than at a huge school like UCLA, which is part of the UC system and has 45,000 students.

California State’s system includes 22 mostly smaller schools, but combined, still total a half million people on campuses. Cal State said its schools would also suspend athletic competitions for the fall semester.

The University of California system (which includes UC Berkeley, UCLA, UC Santa Barbara, UC San Diego, UC Irvine, UC Davis, UC Santa Cruz, UC Riverside and UC Merced) said it is actively planning for three possible scenarios:

  • Scenario 1: For public health reasons, the campus must continue with full remote instruction, and predominantly remote work being done in the operations and research realms.
  • Scenario 2: In-person operations resume, with limits and restrictions imposed by public health authorities.
  • Scenario 3: Campus operations largely return to normal (i.e., mostly in-person), but wherever possible will accommodate students, staff, researchers and instructors who need or prefer to operate remotely due to continuing pandemic conditions.

The different paths that the two systems are taking illustrate the stomach-churning decisions school face that could shape their financial futures for years to come, to say nothing of what they mean to surrounding communities that feed off university economies. And now, California is coming to recognize that Los Angeles County may be under some version of a stay-at-home order for a few more months. And like the two university systems, other counties in the state are under various stages of closure.

The Cal State decision Tuesday is seen as “the first in the nation,” and could shape national thinking about whether universities should open their dorms and classrooms in the fall.

One private school in Michigan reacted to California State’s announcement by saying it was astonishing to toss in the towel so early. InsideHigherEd included this passage:

Larry P. Arnn, Hillsdale’s president, delivered a short video statement to admitted students while standing in front of the college’s Central Hall, where he said students will pick up a packet on Aug. 23.

“There’s a bunch of astonishing stuff happening in the world,” including the virus, Arnn said. “But another astonishing thing is, first of all, some colleges are announcing that they are not intending to have in-person classes in the fall.”

Here is a running list of universities’ plans around America.

New home mortgage delinquency figures show trouble but not disaster brewing

A new survey out this week said the states with the biggest quarterly increases in delinquent mortgage payments are (in order) New York, Alaska, Florida, Louisiana and New Jersey.

While the report said there is a lot to be concerned about, home mortgage payments have not yet fallen off the cliff. They are actually about on par with where we were a year ago. Less than 5% of mortgage loans are currently delinquent, according to the Mortgage Bankers Association.

The last quarter saw a rise in delinquent payments since the final quarter of 2019, but that quarter had the lowest delinquencies in the history of the survey going back to 1979. Context is everything.

The first-quarter rise, the survey said, looks about a big as the rise the bankers saw after hurricanes Harvey, Irma and Maria in 2017.

And there is this other guidance about the delinquency numbers: Because home values have been rising, it may be that people who can no longer afford their monthly payments may still have equity in their homes, unlike the housing bubble trouble a decade ago.

Empty hotels mean lost jobs and taxes

We have spent a good bit of time looking at COVID-19-injured segments of the business community, from restaurants to airline travel. But hotels take a double or triple hit when they typically have restaurant, convention and room incomes all at the same closed properties.

Reuters reported that U.S. hotels “bled $1.4 billion a week during the Great Lockdown.”

Hyatt said Tuesday it would lay off 1,300 workers.

Hilton executives said it may take several years to rebuild to the business they had before the pandemic, but that hotels will fill faster than airlines and cruise ships.

The big hotel chains hope that April was “the bottom” of the market. The Wall Street Journal reported on what Marriott International Inc. chief executive Arne Sorenson told investors in a call:

“‘April seems to have defined the bottom, and when we look at the last couple of weeks, there have not been significant movements in the number of closed hotels, but most days we’re seeing one or two or three more hotels reopen than we are seeing hotels closed,” Mr. Sorenson said.

Marriott has about 7,200 properties worldwide and a fourth of them are closed. European chains said they may not see a hotel recovery until 2023.

In the hotel business, two big success metrics are room occupancy and, for those rooms that are occupied, “revenues per available room” or “RevPar.” Look at these figures from The Real Deal, which monitors the real estate industry. The figures show hotels are about 70% empty in major cities around the country, and even the rooms that are occupied are generating a fraction of their normal rates:

In Los Angeles, occupancy dropped more than 74% to a rate of a little more than 21%, and RevPAR declined about 85% to $22.78.

Chicago saw occupancy decline about 78% to a rate of nearly 18%, and RevPAR fell 90% to $12.78.

Miami had an occupancy rate of roughly 20% — a drop of nearly 76% from the same time a year earlier. RevPAR declined about 90% to $18.02.

In Cleveland, the head of the state hotel and lodging association said occupancy rates are up a few percent from April, but it may be a mirage. That’s because so many hotels are still closed that those that have remained open raise occupancy percentages when they fill up just a few rooms. The association said it does not expect May to show much of an improvement over April.

Austin hotel owners reported a small improvement in occupancy rates this week, but even with three weeks of slow growth, only a fourth of the city’s rooms are filled.

American Indian tribal finances are in COVID-19-caused trouble

500 tribal-run casinos nationwide have been closed since the pandemic began. Those casinos are a major source of money for tribes to provide health care and other essential services to Native Americans.

About 30% of the workers in tribal-owned casinos are Native Americans. The casinos generate just short of $18 billion in federal, state and local taxes, according to The Harvard Project on American Indian Economic Development.

COVID-19 has caused a lot more than economic damage for tribes. The New York Times reported:

The Navajo Nation, the country’s largest Indian reservation, now has a higher death rate than any U.S. state except New York, New Jersey, Connecticut and Massachusetts.

Across Indian Country, more than 5,200 cases have been confirmed in communities from Arizona to Minnesota — a number that might seem small compared with those in major urban centers in New York and Los Angeles, but which in many cases represents significant local clusters that are challenging the limited resources of tribal clinics and rural hospitals.

The Harvard Project on American Indian Economic Development reported:

“Native American tribes’ tax base have been cut literally to zero, and tribal governments don’t have money to run the health clinic or child protection services,” said Joseph Kalt, co-director of the project. “While state and local governments are also in trouble, at least they have a tax base, but tribes are really struggling because their tax base has been wiped out.”

The project also provided these figures, which put a lot of perspective on this story:

Of the 574 federally recognized tribes, a little more than 40%, or 245, operate casinos. And before COVID-19, tribal businesses and governments supported 1.1 million jobs, 915,000 of them held by non-Native Americans. In some regions, tribal enterprises have been the economic anchors and dominant employers.

What hotels may do to recapture bookings

CFO.com, which speaks to the money side of businesses, made a few recommendations for hotels to restart their engines:

Make it easier to book now and cancel without penalties. The key is to get rooms booked. Juice up loyalty programs to attract the hard-core travelers as soon as possible. Start marketing 2021 travel right now. Sell a dream of a better day ahead. Market upgrades not discounts.

I thought it was such interesting advice and I am thinking about how it might apply way beyond the hotel business.

Could we turn closed and closing hotels into affordable housing?

In Branson, Missouri, one hotel owner who had a ton of unused rooms found a way to fill them. He turned the place into low-income housing.

This caught my attention because I am seeing so many stories about hotels that were for sale and now, in the midst of the pandemic, the sales have fallen through.

It happened in Austin, for example. Another scrapped sale involved properties in New York; Jackson Hole, Wyoming; and San Francisco.

Would you walk a mile to avoid a crowded bus/train/subway station?

As Brits go back to work this week, the government is urging people to be willing to “walk a mile” to find quieter and less crowded railway and subway stations and to stay away from crowds.

Walk a mile? Can you envision that in the U.S.?

Brits are also urged to travel earlier or later than they normally would and to use cashless payments. We will see how all that works over the next few days.

The fight for open records in a COVID-19-closed country

The last thing that a news organization wants to spend money on right now might be a legal battle, particularly a battle that does not produce revenue. It is asking an awful lot when, in the backwash of this pandemic, many and maybe even most news organizations will be struggling to survive. But that reluctance may be more harmful than we realize in the years to come.

We see, right here where I am in Florida, for example, that without a lawsuit, the state will not turn over vital records involving people who died of COVID-19 related illnesses. Until the pandemic, these very records were available from our medical examiners, and now are suddenly “protected” information, though nobody can explain why they are protected.

The State of Florida, once the most open-records-friendly state in the nation, withheld a list of coronavirus deaths assembled by the state’s medical examiners. After weeks of delay, the state finally released the list and blacked out the causes of death. On top of that, news organizations have found the list does not appear to be complete.

(Courtesy: Florida Department of Law Enforcement)

It matters because, without accurate numbers, we cannot know how many people have died from COVID-19 and where they died — for example, the name of a nursing home, prison or the home address.

Muckrock reported:

Many federal FOIA offices — including EPA, Department of Agriculture, and the Department of Energy, reported E&E News — have transitioned to remote work conditions and claim that operations will continue, adopting a workflow heavy on electronic communication. The Federal Bureau of Investigation, though, took the strange step of cutting off electronic submissions altogether, requiring any requests to be made via snail mail rather than by email or the agency eFOIPA portal. The FBI hasn’t provided additional clarification for the reasoning since an agency attorney told BuzzFeed News the FBI “cannot do the work remotely, due to the system’s security constraints.”

The FOIA Project said open records cases are taking longer to resolve and they just keep stacking up.

(Courtesy: The FOIA Project)

Muckrock said some states have all but shut down their FOIA offices:

Local governments are extending deadlines or suspending FOIA operations as they move to pause non-essential work. Emergency legislation in Washington, D.C., included extending deadlines for all FOIA requests, and the Cities of Philadelphia and Chicago are among those that informed current requesters of similar changes. Fresno, California, notified requesters this week that its responses to requests will be suspended until “the state of emergency has ended.”

Since President Donald Trump took office, the FOIA Project found open records lawsuits shot up. Nearly half of them were filed by individual reporters, not by media companies. The FOIA Project keeps a list of reporters and media companies who have filed FOIA lawsuits against the federal government from 2000 through 2018. Just 38 reporters accounted for 57% of all FOIA lawsuits filed over 18 years.

In just the last month, The New York Times and NPR filed lawsuits to pry open federal records. The Times is consistently one of the most prolific plaintiffs in federal records lawsuits.

The National Press Photographers Association has also stepped in several times recently to file suit on behalf of visual journalists. Sinclair Broadcast Group said it spent more than $150,000 in 2019 to win a lawsuit against the Baltimore school system over 11,000 pages of records that underpinned the journalists’ stories about grade-fixing. The lawsuit resulted in some, but not all, of the legal fees being paid by the city.

In a 2010 study called “Litigation, Legislation, and Democracy in a Post-Newspaper America,” Brigham Young professor RonNell Andersen Jones pointed out that journalists have shaped crucial policy by going to court. She wrote, “In literally every state in the union, the major force behind the adoption of open-meetings acts and open-records laws, and the entities that overwhelmingly invoke them for public-serving purposes after their adoption, are newspaper companies.”

Andersen Jones called media companies “legal instigators and enforcers” and said, “They have funded the drafting of virtually every piece of open-government legislation on both a federal and a state level. They have also funded litigation efforts to ensure that these statutes, once passed, are obeyed by government officials.”

And, she said, while other new media sources may fill the roles of gathering and reporting the news, “there is no apparent successor to the role of legal instigator and enforcer.”

Just when we need a free flow of data and documents to understand the size of the pandemic and how we are — or are not — responding to it, we find governments being less responsive and media companies unable to afford to pay the price of going to court. We may all pay a higher price if they can’t.

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Al Tompkins is senior faculty at Poynter. He can be reached at atompkins@poynter.org or on Twitter, @atompkins.