Analysts Agree US Hotels Will Take Years to Bounce Back


Source: Hotel News Now
May 28, 2020

REPORT FROM THE U.S.—As the industry continues to navigate through the coronavirus pandemic, hoteliers want to know when the recovery will start and how fast it will be.

Recently revised forecasts for U.S. hotel performance indicate the recovery is near, but it’s going to take time before hoteliers see demand and rates return to normal. That recovery is dependent on several factors, any of which could slow it down.

The recovery

Overall, demand is expected to bounce back in 2021 by 50%, which means an increase in occupancy and revenue-per-available-room growth of just shy of 50%, said Jan Freitag, SVP of lodging insights at STR, parent company of Hotel News Now. Those percentage changes can be a bit misleading, however, he said. If RevPAR declines by almost 60% in 2020 and then increases by almost 50% in 2021, that is not a V-shaped recovery because the base that 2021 uses is much lower, he said.

Declines in 2020 are largely driven by the lack of corporate travel demand and the complete lack of group demand, Freitag said. It’s difficult to forecast how group demand returns since the industry is now in a “6-foot world post COVID-19” and the playbook for meetings, conventions and citywide events is being written now, he said.

CBRE’s latest forecast doesn’t differ much from its previous revisions, though it is a bit more pessimistic for 2020 and 2021, said Jamie Lane, senior managing economist of Econometric Advisors and CBRE Hotels Americas Research. It’s baseline forecast calls for a three-year recovery in nominal RevPAR for the U.S. industry with demand returning to pre-pandemic levels by mid-2022, he said. It takes about another year to get pricing back.

Social distancing protocols and limits on the number of people who can congregate are going to impair and restrict group business, he said. Consumer confidence is another factor, and the industry must take into consideration how willing a consumer is going to be to get back into a ballroom, he said.

Read the full article here.


Comments are closed.